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integrating excellence

1 Our excellence in operations, partnerships and support infrastructure combine to propel growth

In our relentless pursuit to increase value-add for We also went to great lengths to ensure that we customers, we continuously work at strengthening have sufficient manpower qualified to maintain our three main pillars of engineering excellence – and handle one of the most advanced aircraft in the operations, partnerships and support infrastructure. world. About 200 Licensed Aircraft Engineers A myriad of activities goes on expeditiously round and Technicians were trained and certified to the clock to ensure smooth, on-time delivery for our service the A380. airline customers worldwide. With an investment of $65 million in an A380- Our operational staff are focused on delivering the capable hangar, manpower training and equipment, highest standards of aircraft maintenance, acquiring the Company quickly achieved A380 readiness skills on the latest aircraft types, taking on new and catered to Singapore Airlines’ first two A380s’ forms of maintenance, repair and overhaul (MRO) maintenance checks in the hangars successfully. work, such as VVIP aircraft cabin reconfiguration Accessing new markets In view that only Civil and passenger-to-freighter conversion, and setting Aviation Authority of China (CAAC)-licensed their own records for the fastest turnaround time. engineers are allowed to certify China-registered Partnerships are strategically being forged to aircraft, we reached out to the Chinese market by provide greater MRO network support and extend engaging CAAC-licensed engineers from China and the Group’s global presence. With people as the assigning them to perform certification services at backbone of our competitive excellence, support Changi Airport for our Chinese airline customers. infrastructure is continuously being improved to ensure we deliver the best in customer service. Besides work from the airlines, we also pursued At the same time, IT infrastructure undergoes non-traditional revenue sources in the area of constant upgrading to improve workflow component overhaul, including warranty repair work communication and training methodologies on behalf of original equipment manufacturers. are raised to new heights to train engineers, The Company also embarked on new products like technicians and support staff more efficiently. maintenance services for B777-300ER, A330-300 and VVIP cabin reconfiguration in FY2007/08. With the flurry of activities that surround our MRO operations, we are ever more focused to integrate We made our first entry into the Boeing B777 the different areas of our excellence to create a FMP market when we sealed a Fleet Management seamless flow in our business, as we propel SIA Programme contract with V Australia, Virgin Blue’s Engineering Company’s growth into the future. new trans-Pacific airline, to maintain its initial fleet of seven B777-300ER aircraft. EXCELLENCE IN OPERATIONS EXCELLENCE IN PARTNERSHIPS Maintaining the latest aircraft With the entry into service of the first Airbus A380 in October 2007, In FY2007/08, we continued our pursuit of strategic SIA Engineering Company became the first in the partners to further anchor our position as a global world to maintain the world’s first superjumbo. The MRO player. Company adopted a pioneering spirit and ensured The Company has adopted the strategy of that its maintenance facilities in Singapore are fully leveraging on its line maintenance capabilities to A380-ready. spearhead its growth beyond Singapore. To date,

2 3 we have established line maintenance operations enabling us to provide better control and services to at more than 40 airports in Australia, Hong Kong, our customer flights. The Company also started the Indonesia and the Philippines. Line maintenance implementation of Radio Frequency Identification activities require lower capital expenditure and (RFID), which provides real-time visibility of aircraft time to get started, and the joint venture can be components’ repair status and transmits information expanded into other areas, such as airframe and quickly between the hangars and workshops. This component maintenance, at a later stage. improves aircraft component repair time. This stepped-up approach in overseas expansion This initiative also prepares the Company to handle has worked well. Following the line maintenance technologically advanced RFID-enabled aircraft, joint venture formed with Cebu Pacific Air in 2005, such as the Boeing 787 Dreamliner, which will have SIA Engineering Company entered into a second more than 2,000 RFID-enabled components. joint venture with the airline at Clark International In addition, we further elevated our training Airport in the Philippines in April 2008 to provide standards by becoming a pioneer member of the heavy maintenance. Airbus Maintenance Training Network. This gives us Named SIA Engineering (Philippines) Corporation, access to Airbus’ latest training methodology. The the joint venture company plans to construct three 2-Dimensional Maintenance & Flight Training Device hangars at Clark International Airport over the (2D-MFTD) developed by Airbus uses virtual reality next three years to provide heavy and light MRO technology to closely simulate the images, displays, services for narrow-body and wide-body aircraft to warnings and indications in the flight deck. With Cebu Pacific Air and other carriers. This facility will this state-of-the-art training tool, our engineers can provide the increased capacity to further support practise maintenance on the A380 as they would on our customers and capture a larger share of the a real aircraft, hence enabling them to learn better global MRO outsourcing flowing into Asia. and faster. In August 2007, we acquired Aircraft Maintenance Services Australia (AMSA), a privately owned line maintenance company in Australia, which offers line maintenance services in Sydney, Brisbane, Coolangatta, Melbourne, Adelaide and Perth. In November, we established an MOU with Saigon Ground Services, a division of the Southern Airport Authorities, to form a line maintenance joint venture at Tan Son Nhat International Airport in Ho Chi Minh City, Vietnam. An excellent network of joint ventures continues to entrench our presence in the region and to enable us to respond swiftly and effectively to customers’ every need. EXCELLENCE in SUPPORT INFRASTRUCTURE A strong support infrastructure underpins the success of our Company’s operations. We continued to take steady strides in improving our technological systems and training. On the IT front, a new system was implemented to display real-time location of aircraft and serviceability status graphically at Changi Airport,

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 strength in numbers

Revenue exceeded $1 billion for the first time, growing 3.3% or $32.2 million to $1,009.6 million.

Group Revenue

FY07/08: $1,009.6 million 3.3%

FY06/07: $977.4 million

Group Profit Attributable to Equity Holders of the Company

FY07/08: $253.8 million 4.8%

FY06/07: $242.1 million

7 Share of Profits from Joint Venture & Associated Companies

FY07/08: $157.8 million 13.1%

FY06/07: $139.5 million

Line Maintenance Revenue

FY07/08: $335.4 million 8.4%

FY06/07: $309.5 million

Airframe & Component Overhaul Revenue

FY07/08: $603.1 million 1.9%

FY06/07: $591.8 million

Fleet Management Revenue

FY07/08: $71.1 million 6.6%

FY06/07: $76.1 million 8 chairman’s statement

Dear Shareholders, The global economic stress triggered by the financial woes in the US and the weakening US currency presented challenges in the second half of 2007. Undeterred, the Group continued to extend its maintenance, repair and overhaul (MRO) reach to the fast-growing markets of Asia-Pacific. This strategy saw us making resolute strides into the Philippines, Australia and Vietnam in FY2007/08.

9 The Group’s 21st joint venture at Clark International hangar operations at Clark, is testimony to the Airport, the Philippines, will be our first overseas- strength and effectiveness of this strategy. based heavy maintenance facility. Three hangars, REACHING OUT TO NEW MARKETS In October to be built over three years, will augment extensive 2007, Singapore Airlines launched the world’s capabilities at the Singapore main base and fuel the first commercial service of the Airbus A380 on the Group’s growth across Asia. Singapore-Sydney route. Making our mark as the In Australia, we acquired Aircraft Maintenance first in the world to maintain the A380, our wholly Services Australia Pty Ltd (AMSA), a line maintenance owned subsidiary, AMSA played a key role in company with operations in six major Australian ensuring smooth operations of the technologically airports. Over the next 12 months, AMSA aims to advanced airliner in Sydney. extend its network beyond Australia to New Zealand. AMSA’s contributions in Australia will Following the signing of an MOU with Saigon reach new heights when Virgin Ground Services in November 2007, we are in Blue’s new trans-Pacific final negotiations to establish line maintenance airline, V Australia, operations at Tan Son Nhat International Airport commences operations. in Ho Chi Minh City, Vietnam. In April 2008, V Australia became our latest fleet Expansion through collaborations with the right management programme partner on the right product is at the very foundation (FMP) customer with its of our growth plans. This strategy saw us forge initial fleet of seven links with the world’s leading original equipment B777-300ERs. With V manufacturers (OEMs) in the last ten years to Australia’s inaugural base their regional “Centres of Excellence” at our network covering Singapore hub. Los Angeles in POWERING OUR EXTERNAL WING With existing the US, we have line maintenance operations at more than 40 an opportunity to airports spanning across Singapore, Hong Kong, extend our presence Indonesia, the Philippines and Australia, the Group to the US. is at the vanguard of aviation growth in the DE EPENING Asia-Pacific. Our line maintenance joint ventures, OU R CORE forged with strategic partners – airlines and ground CA PABILITIES service providers – give us ready base loads and Our joint ventures operating networks. with the OEMs Line maintenance offers an asset-light entry to key continued to markets in the region, enabling us to scale up to perform well. heavy maintenance operations when factors such as Over the last customer base, business volume and market forces five years, their are favourable. Our line maintenance initiative with contributions Cebu Pacific Air formed three years ago, followed to the Group’s by the latest tie-up with the airline to develop profitability rose from 10 “Our ability to deliver total, turnkey solutions to support an airline’s engineering operations round the clock on a global basis underpins our value proposition to customers.”

32.7% of pre-tax profit in FY2002/03 to 55.3% in from this project will stand us in good stead to FY2007/08, with our share of the profits growing at make inroads into the lucrative and growing VVIP a compounded rate of 17% annually. aircraft market. In December 2007, we signed an agreement with Offering Total Solutions for Airlines Airbus to become a pioneer member of the Airbus Introduced some years ago, Fleet Management Maintenance Training Network. This, coupled with Programme (FMP) has fast become a growing our membership in the Airbus MRO Network caucus business segment. As at 31 March 2008, we have since 2005, will enhance our competitive advantage seven FMP customers with a combined fleet of and reputation, and accord privileged access to 109 Boeing B747-400s and Airbus A320s, Airbus’ global MRO customer base. comprising 57 aircraft in service and the remaining awaiting deliveries. We entered into collaborations with Pratt & Whitney and Rolls-Royce to provide engine support Our ability to deliver total, turnkey solutions to services to their customers. This plugs our line support an airline’s engineering operations round maintenance services in Singapore and overseas to the clock on a global basis underpins our value the engine makers’ customer support networks, which proposition to customers. have service centres in key airports around the world, Dividend Your Directors are recommending a final such as London, New York, Frankfurt and Hong Kong. dividend of 16 cents per share. This brings the total In 2008, we shall be starting our first VVIP aircraft dividend for FY2007/08 to 20 cents per share, which cabin reconfiguration. The multi-million dollar translates to a gross dividend yield of 5.1% (based project encompasses a complete design and on the closing price of $3.95 on 31 March 2008). retrofit programme to convert a B747-400 into a Business Outlook While the operating VVIP aircraft. The experience and knowledge gained environment remains challenging, with our strong

11 “The development of a world-class workforce demands that we spare no effort in bringing our people along with us as we transform ourselves into a global Company.” presence in Singapore and the support of a robust expertise and experience that will benefit the network of 21 companies spread across seven Company’s strategic thinking and direction. countries, we are well positioned to weather the The commitment and dedicated services of our headwinds. The expansion in airline fleets and Staff and the constructive co-operation extended operating networks in the Asia-Pacific will add by the Staff Unions are well appreciated. We must momentum to the MRO growth in the region. The continue to work hard as a team, and with a continuing trend in MRO outsourcing from the more common vision, be ready to embrace changes in developed and mature markets is encouraging, and the operating environment. The core strength of we stand ready to increase our base of customers the Group is its people. Through our ongoing from Europe and the US. ‘Change Management’ initiatives, we will continue Our stable of subsidiary, joint venture and to build on the successful engagement with Staff associated companies is expected to sustain and Unions to fortify camaraderie and mutual their contributions to the Group’s profitability. understanding. The development of a world-class workforce demands that we spare no effort in Economic uncertainties brought about by the bringing our people along with us as we transform current turmoil in global financial markets, pressure ourselves into a global Company. on margins and the weak US dollar will continue to receive attention. To our valued customers, I am grateful for their consistent support and frank feedback. As we Acknowledgements I would like to thank my continue to roll out new services and develop new fellow Directors for their active support, guidance markets, we remain passionately committed to our and unwavering commitment during the past year. customers’ aspirations and success. Your Board actively reviews and renews We are focused on delivering long-term shareholder directorships to allow for infusion of fresh value to our investors, whose support and loyalty perspectives, expertise and experience. Last year, are never taken for granted. The strategic and three long-serving Directors – Wong Nang Jang, tactical pieces that we have set out to put together N Varaprasad and Thio Su Mien – retired at the are coming into place progressively. As we push close of the Annual General Meeting. This year, yet the boundaries and seek opportunities in Singapore another stalwart will make way for a fresh face. After and beyond, we will be pragmatic in our approach more than eight years of dedicated service, Bey and prudent in our execution to achieve steady, Soo Khiang has decided to retire and the Board is sustainable growth for the long term. proposing the election of Ng Chin Hwee to succeed him. Soo Khiang’s valuable contributions over the years to strengthen Board deliberations and decision-making, particularly in the complex area of aviation technology, will be missed. I thank Soo Khiang and other past Directors for their dedication and service. In August 2007, the Board welcomed Ron Foo, stephen lee ching yen Lim Joo Boon and Oo Soon Hee. These chairman independent Directors bring with them diverse 12 board of directors

A B

C D E

A: MR STEPHEN LEE CHING YEN, CHAIRMAN He served as Chairman of International Enterprise Singapore from 1995-2002 and of PSA International Mr Lee was appointed Chairman of SIA Engineering Pte Ltd from 2002-2005 and was a Director of Company with effect from 1 January 2006. Neptune Orient Lines Ltd from 2000-2002. He is the Managing Director of Shanghai Commercial & Savings Bank (Taiwan) and Great Mr Lee was a Nominated Member of Parliament Malaysia Textile Investments Pte Ltd. from 1994-1997 and was awarded the Distinguished Service Order Award in 2006 and the Public Service At present, Mr Lee is the Chairman of Singapore Star Award in 1998. Airlines Ltd and Singapore Business Federation. He graduated from Northwestern University, He serves as a Director of Fraser & Neave Ltd, Illinois, USA in 1973 with a Masters in Business BAOSTEEL Group (Shanghai), Shanghai Commercial Administration. & Savings Bank Ltd (Hong Kong), Singapore Labour Foundation and Kidney Dialysis Foundation. B: MR CHEW CHOON SENG, DEPUTY CHAIRMAN Mr Lee has been the President of the Singapore Mr Chew joined the Board and was appointed National Employers’ Federation since 1988 and is Deputy Chairman of SIA Engineering Company with a Council Member of the Singapore National effect from 22 May 2003. Wages Council.

13 Mr Chew is the CEO and a Director of Singapore and Singapore in 1999 when Hewlett-Packard spun Airlines Ltd, which he joined in 1972. He is the off its Semiconductor Component Operations Deputy Chairman of Singapore Airport Terminal to form Agilent Technologies Inc. Services Ltd, and is a Director of Singapore He has been council member in the Industrial Exchange Ltd and of Government of Singapore Coordination Council under the Ministry of Investment Corporation Pte Ltd. He is a member International Trade & Industry of Malaysia since 2000. of the Board of Governors of the International Air Mr Tan was the Director of Singapore Workforce Transport Association (IATA). Development Agency under the Singapore Ministry He holds a Bachelor’s degree with First Class of Manpower from 2004-2005. He was also the Honours in Mechanical Engineering from the Northern Region Chairman for Young Enterprise University of Singapore, and a Master’s degree (2003-2004), a community educational programme in Operations Research and Management Studies under the auspices of the American Malaysian from Imperial College, University of London. Chamber of Commerce and a founder member of Penang Skills Development Corporation. C: MR KOH KHENG SIONG, DIRECTOR Mr Koh was appointed a Director of SIA Engineering Mr Tan holds a Diploma in Medical Laboratory Company on 1 September 2005. He is the Chairman Technology and Management Studies, as well as an of the Audit Committee with effect from 22 July 2006. MBA (Distinctions) from the Golden Gate University. Mr Koh held a number of senior management He was awarded the Pingat Kelakuan Tertinggi positions in Singapore and the USA during his (Exemplary Leadership Award), Darjah Johan Negeri career in ExxonMobil. He was Financial Controller (DJN – Second Highest State Award) and the Darjah of ExxonMobil Asia-Pacific Pte Ltd prior to his Setia Pangkuan Negeri which carries the title Dato’ retirement in August 2005. Mr Koh also held the (DSPN) in 1991, 1995 and 1999 respectively from positions of Manager, Financial Planning and the State Government of Penang, Malaysia. Operations, and Manager, Downstream Financial E: MR PAUL CHAN KWAI WAH, DIRECTOR Reporting in Exxon Company International, USA. He was previously Treasurer, Esso Singapore Pte Ltd. Mr Chan was appointed a Director of SIA Engineering Company on 1 August 2006. He is also a non-executive, independent Director of Mapletree Logistics Trust Management Ltd, Venture Mr Chan stepped down as Senior Vice President Corporation Ltd and Orchard Energy Pte Ltd. Mr and Managing Director of Hewlett-Packard Asia Koh served on the Board of SMRT Corporation Ltd Pacific Pte Ltd on 1 May 2006. He was with from 2000-2007. Hewlett-Packard for 28 years, including seven years with Compaq Computer Asia Pacific Pte Ltd. Mr Koh has an Honours degree in Economics from the University of London. He subsequently attained Mr Chan is also a Director of Verigy Ltd, Singapore a Master of Business Administration degree in Power Ltd and National Healthcare Group Pte Ltd. Finance from the University of Chicago Graduate Mr Chan was a former Director of Hewlett-Packard School of Business. Asia Pacific Pte Ltd, Hewlett-Packard (China) Investment Ltd, Hewlett-Packard Singapore Pte D: MR TAN BIAN EE, DIRECTOR Ltd, Compaq Holdings Pte Ltd, Compaq Ventures Mr Tan was appointed a Director of SIA Engineering Pte Ltd, Singapore Telecommunications Ltd, Noel Company on 15 April 2004. Gifts International Ltd and the Singapore Economic He is the Chief Operating Officer of Avago Development Board. Technologies and Worldwide Sales and Global Mr Chan holds a Bachelor of Science (Physics) Operations. He joined Hewlett Packard in 1973 from the University of Singapore and a Diploma in and was promoted to Hewlett-Packard Malaysia Marketing from The Chartered Institute of Marketing Managing Director in 1989. He was then appointed (UK). He also attended the Advanced Management as the President of Agilent Technologies Malaysia Programme at the University of Hawaii. 14 F: LT-GEN (RET) BEY SOO KHIANG, DIRECTOR Singapore Pte Ltd and Morton’s of Chicago Asia Lt-Gen (Ret) Bey was appointed a Director of SIA (Singapore) Pte Ltd. Mr Lim is also a member of the Engineering Company on 1 March 2000. Board of Governors for his alma mater, St. Andrew’s Junior College. He is the Senior Executive Vice President (Operations & Planning) of Singapore Airlines Ltd (SIA). Prior Mr Lim holds both a Bachelor of Laws degree and a to the appointment, he was the Senior Executive Master of Laws degree from the National University Vice President for Operations and Services, Senior of Singapore. Executive Vice President (Technical and Human H: MR LIM JOO BOON, DIRECTOR Resources) and Executive Vice President (Technical). Before joining SIA, he was the Chief of Defence Mr Lim was appointed a Director of SIA Engineering Force in the Ministry of Defence from 1995–2000 Company on 1 August 2007. and the Chief of Air Force from 1992–1995. He held various senior leadership positions within Lt-Gen (Ret) Bey is also the Chairman of SilkAir Accenture organisations in Singapore and the (Singapore) Pte Ltd, Singapore Flying College Pte Asia-Pacific region, including Country Managing Ltd and SIA Properties (Pte) Ltd. Additionally, he Partner in Accenture Taiwan, Head Electronics and is a Board Director of the Sentosa Development High Technology Industries in Accenture Asia-Pacific Corporation, a member of the Board of Governors and Head Supply Change Management. of the Singapore International Foundation and is Mr Lim was a Senior Partner of Accenture Singapore a Director in All Good Gifts Ministries Ltd. He also before his retirement in 2003. His professional holds directorships in Virgin Atlantic Ltd, Virgin expertise is in organisational transformation, Atlantic Airways Ltd and Virgin Travel Group Ltd. business process re-engineering and large-scale Lt-Gen (Ret) was previously Chairman of SATS mission critical IT system implementation. Airport Services Pte Ltd. He is presently a Director of Singapore Pools Pte Ltd, Lt-Gen (Ret) Bey graduated with a Bachelor of Singapore Turf Club and the Inland Revenue Authority Arts (First Class Honours) degree in Engineering of Singapore. and has a Master of Arts degree in Engineering Mr Lim holds a Bachelor of Accountancy (Honours) from the University of Cambridge. In 1988, he degree from the University of Singapore. He is attained a Master of Public Administration degree also a Graduate of the Chartered Institute of from Harvard University. Prior to assuming his Management Accountants, UK and a Fellow of the appointment in SIA, Lt-Gen (Ret) Bey attended the Chartered Association of Certified Accountants, UK. Advanced Management Programme at the Harvard Business School in 2000. I: MR RON FOO SIANG GUAN, DIRECTOR

G: MR ANDREW LIM MING-HUI, DIRECTOR Mr Foo was appointed a Director of SIA Engineering Company on 1 August 2007. Mr Andrew Lim Ming-Hui was appointed a Director of SIA Engineering Company on 1 August 2006. He has more than 35 years of extensive auditing, accounting and financial experience in Mr Lim is a Partner of Allen and Gledhill where he is Singapore and overseas. He has been a partner in Head of the Mergers and Acquisitions practice. He PricewaterhouseCoopers, Singapore for 22 years has extensive experience in domestic and cross- before retiring in December 2005. border mergers and acquisitions, domestic and regional joint ventures, and corporate, regulatory Mr Foo is presently a director of the Singapore and commercial law, among others. Deposit Insurance Corporation, NTUC Income Insurance Co-Operative Ltd, SembCorp Marine Ltd Mr Lim is a Director of Jurong Engineering Ltd, and a member of the Competition Appeal Board. SPTL Holdings Pte Ltd, Morton’s of Chicago

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Mr Foo has also been actively involved as a He was the President & CEO of NatSteel Asia Pte Ltd council member in the Institute of Certified Public and was appointed as Director, South East Asia of Accountants of Singapore (ICPAS) and was awarded Tata Steel Ltd with effect from 1 January 2008. Mr Oo the ICPAS Gold Medal 2004 in recognition of his has more than 30 years of extensive experience in outstanding contributions and distinguished service businesses operating locally and in Asia. to the accounting profession and the community. Mr Oo is presently a Director on the Boards of Mr Foo holds a Bachelor of Arts (Economics) degree ComfortDelgro Corporation Ltd, NatSteel Asia Pte from the University of Manitoba, Canada. He is Ltd, Wuxi NatSteel Metal Products Company Ltd, also a Fellow of the Institute of Certified Public Wuxi Jinyang Metal Products Company Ltd and Tata Accountants of Singapore and a member of the Steel (Thailand) Public Company Ltd. He is also an Canadian Institute of Chartered Accountants. Alternate Director for Southern Steel Berhad. j: Mr Oo Soon Hee, Director Mr Oo graduated from the University of Singapore with a Bachelor of Science (Honours) degree Mr Oo was appointed a Director of SIA Engineering in Applied Chemistry and holds a Diploma in Company on 1 August 2007. Business Administration.

16 K L M

K: MR WONG NANG JANG, DIRECTOR the University of Auckland and a PhD in Transport (Until 20 July 2007) Mr Wong was appointed a Director Studies from the Cranfield Institute of Technology, of SIA Engineering Company on 24 March 2000. UK. He attended the Stanford Executive Programme in 1998. He is the Chairman of WBL Corporation Ltd. He also holds directorships in Oversea-Chinese Banking He received the Public Administration Award (Gold) Corporation Ltd, PacificMas Berhad and Singapore in 1996. Symphonia Company Ltd. M: DR THIO SU MIEN, DIRECTOR Mr Wong graduated from the University of (Until 20 July 2007) Dr Thio was appointed a Director Singapore with an Honours degree in Economics. of SIA Engineering Company on 1 March 2000. She is an Advocate and Solicitor of the Supreme Court L: DR N VARAPRASAD, DIRECTOR of Singapore and is currently a Senior Executive (Until 20 July 2007) Dr Varaprasad was appointed a Director of TSMP Law Corporation and a Director of Director of SIA Engineering Company on 1 March 2000. Allens Arthur Robinson TSMP International Lawyers. He is the Chief Executive of the National Library Dr Thio currently holds various directorships, Board, Singapore. Prior to that, he was Deputy including MobileOne Ltd and Jasper Investments Ltd. President of the National University of Singapore and Principal/CEO of Temasek Polytechnic. He Previously Dean of the Faculty of Law at the also sits on the Singapore Advisory Council of the University of Singapore, Dr Thio has held various Singapore HR Institute. positions in professional bodies and institutions, and has sat on the boards of subsidiaries of Dr Varaprasad currently serves on the Board of multinational corporations in Singapore. She has Trustees of SIM University. He is also a member of served on the Board of Legal Education, chaired the National Council Against Drug Abuse. one of the Disciplinary Committees set up by the He has previously served on various statutory boards Chief Justice and was an Accredited Arbitrator as well as professional and social organisations. at the Singapore International Arbitration Centre. She has also served as Judge and Senior Vice Dr Varaprasad graduated with a Bachelor of President of the World Bank Administrative Tribunal Engineering (First Class Honours) in Mechanical and as a member of the Asian Development Bank Engineering from the University of Canterbury (NZ), Administrative Tribunal. attained a Masters in Engineering (First Class) from

17 N: Mr Ng Chin Hwee, PROPOSED DIRECTOR Mr Ng Chin Hwee is the Executive Vice President for Human Resources and Planning in Singapore Airlines Ltd (SIA). He joined SIA in 1985 and has been appointed to various senior positions in Singapore and overseas. Among the overseas stints, Mr Ng served as Manager Myanmar for SIA’s regional carrier Tradewinds (later renamed as SilkAir), SIA’s Manager Victoria and Tasmania in Australia, and General Manager Germany. Upon his return to Singapore in 1988, he served as Vice President Ground Services. He was then promoted to Divisional Vice President in 1999 and Senior Vice President Americas in 2001. In 2004, he returned to

N Singapore to take up the position of President & Chief Executive Officer of Singapore Airport Terminal Services Ltd (SATS). He left SATS to rejoin SIA and was promoted to his current position on 1 January 2008. Mr Ng was previously a Director on the Boards of SATS Airport Services Pte Ltd, SATS Catering Pte Ltd, Beijing Airport Inflight Kitchen Ltd, Beijing Aviation Ground Services Co. Ltd and P T Jasa Angkasa Semesta Tbk. Mr Ng graduated from the National University of Singapore with a First Class Honours degree in Engineering and holds a Master of Science in Management degree from the Massachusetts Institute of Technology, USA.

18 corporate data

BOARD OF DIRECTORS NOMINATING COMMITTEE AUDITORS Chairman Chairman Ernst & Young Stephen Lee Ching Yen Tan Bian Ee Certified Public Accountants (from 22 October 2007) One Raffles Quay Deputy Chairman Paul Chan Kwai Wah Level 18, North Tower Chew Choon Seng (until 21 October 2007) Singapore 048583 Directors Members Bey Soo Khiang AUDIT PARTNER Chew Choon Seng Paul Chan Kwai Wah Mak Keat Meng Oo Soon Hee Koh Kheng Siong (from 15 August 2007) (appointed since FY2005/06) Andrew Lim Ming-Hui Wong Nang Jang (until 20 July 2007) REGISTERED OFFICE Tan Bian Ee SIA Engineering Company Limited Ron Foo Siang Guan COMPENSATION & HR 31 Airline Road (from 1 August 2007) COMMITTEE Singapore 819831 Lim Joo Boon Email: [email protected] (from 1 August 2007) Chairman Paul Chan Kwai Wah Website: www.siaec.com.sg Oo Soon Hee (from 5 November 2007) Tel: (65) 6541-4768 (from 1 August 2007) N Varaprasad Fax: (65) 6546-0679 Thio Su Mien (until 20 July 2007) (until 20 July 2007) CONTACT PERSONS Devika Rani Davar Wong Nang Jang Members Company Secretary / (until 20 July 2007) Chew Choon Seng Vice President Corporate N Varaprasad Koh Kheng Siong (until 20 July 2007) Lim Joo Boon Email: [email protected] (from 15 August 2007) Tel: (65) 6541-5151 Company Secretary Fax: (65) 6546-0679 Devika Rani Davar BOARD COMMITTEE Chia Peck Yong AUDIT COMMITTEE Members Senior Manager Public Affairs Bey Soo Khiang Chairman Email: [email protected] Koh Kheng Siong Chew Choon Seng Tel: (65) 6541-5134 Fax: (65) 6546-0679 Members Alternate Tan Bian Ee Paul Chan Kwai Wah (from 20 July 2007) Andrew Lim Ming-Hui Thio Su Mien (from 20 July 2007) (until 20 July 2007) Ron Foo Siang Guan (from 15 August 2007) REGISTRAR Oo Soon Hee M & C Services Private Limited (from 15 August 2007) 138 Robinson Road Thio Su Mien #17-00 (until 20 July 2007) The Corporate Office N Varaprasad Singapore 068906 (until 20 July 2007) 19 executive management

WILLIAM TAN SENG KOON President & Chief Executive Officer

A B C D E

A D CHAN SENG YONG ZARINA PIPERDI Senior Vice President Senior Vice President (Services) (Human Resources)

B E PNG KIM CHIANG IVAN NEO SEOK KOK Senior Vice President Senior Vice President (Commercial) (Aircraft & Component Services)

C JACK KOH SWEE LIM ANNE ANG (from 16 May 2008) Senior Vice President CHIN SAK HIN (until 15 May 2008) (Line Maintenance Chief Financial Officer & Business Development)

20 statistical highlights

2007-08 2006-07 % Change

FINANCIAL STATISTICS R1 Group ($ million) Revenue 1,009.6 977.4 +3.3 Expenditure 906.7 875.4 +3.6 Operating profit 102.9 102.0 +0.9 Profit before taxation 285.5 271.0 +5.4 Profit attributable to equity holders of the Company 253.8 242.1 +4.8

Share capital 245.0 214.5 +14.2 R1 SIA Engineering Company’s financial year is from 1 April Reserves to 31 March. Throughout this General reserve 937.5 811.7 +15.5 report, all financial figures are Share-based compensation reserve 28.5 18.0 +58.3 in Singapore Dollars, unless stated otherwise. Fair value reserve 2.7 –– R2 Return on shareholders’ Foreign currency translation reserve (88.4) (47.1) +87.7 funds is the profit attributable Equity attributable to equity holders of the Company 1,125.3 997.1 +12.9 to equity holders of the Company expressed as a R2 percentage of the average Return on shareholders’ funds (%) 23.9 23.8 + 0.1 pt equity attributable to equity holders of the Company. Total assets 1,413.5 1,315.0 +7.5 R3 Net liquid assets is derived Net liquid assets R3 437.2 397.6 +10.0 by offsetting current loans against liquid assets. Value added 755.5 717.0 +5.4 R4 Earnings after tax per share (basic) is computed by dividing the profit attributable Per Share Data (cents) to equity holders of the Earnings before tax 26.7 25.7 +3.9 Company by the weighted Earnings after tax - basic R4 23.7 23.0 +3.2 average number of ordinary R5 shares in issue. - diluted 23.3 22.5 +3.6 R5 Earnings after tax per share Net asset value R6 104.7 93.9 +11.5 (diluted) is computed by dividing the profit attributable Dividends (cents per share) to equity holders of the Company by the weighted Interim dividend 4.0 4.0 – average number of ordinary Proposed final dividend 16.0 8.0 +100.0 shares in issue after adjusting for the dilutive effect on the Company ($ million) exercise of all outstanding share options granted to Revenue 967.2 946.2 +2.2 employees. Expenditure 865.9 843.4 +2.7 R6 Net asset value per share is Operating profit 101.3 102.8 -1.5 computed by dividing the equity attributable to equity Profit before taxation 223.9 178.2 +25.6 holders of the Company by Profit after taxation 203.1 157.9 +28.6 the number of ordinary shares in issue at 31 March. Value Added 678.4 615.5 +10.2

PRODUCTIVITY AND EMPLOYEE DATA Employee Productivity – Company Average number of employees 5,550 5,149 +7.8 Revenue per employee ($) 174,265 183,759 -5.2 Value added per employee ($) 122,226 119,540 +2.2

Employee Productivity – Group Average number of employees 6,116 5,661 +8.0 Revenue per employee ($) 165,071 172,651 -4.4 21 Value added per employee ($) 123,528 126,651 -2.5 corporate calendar 2007

11 MAY Announcement of FY2006/07 full-year financial results 14 MAY Analyst briefing on FY2006/07 full-year financial results 15 JUN Despatch of Summary Financial Statement to shareholders 2 JUL Grant of share options under Employee Share Option Plan 4 JUL Despatch of Annual Report to shareholders 20 JUL 25th Annual General Meeting 1 AUG Announcement of FY2007/08 first-quarter financial results 31 OCT Announcement of FY2007/08 second-quarter financial results 1 NOV Analyst briefing on FY2007/08 second-quarter financial results 2008

29 JAN Announcement of FY2007/08 third-quarter financial results 7 MAY Announcement of FY2007/08 full-year financial results 7 MAY Analyst briefing on FY2007/08 full-year financial results 13 JUN Despatch of Summary Financial Statement to shareholders 27 JUN Despatch of Annual Report to shareholders 1 JUL Grant of share options under Employee Share Option Plan 18 JUL 26th Annual General Meeting 24 JUL Announcement of FY2008/09 first-quarter financial results 3 NOV Announcement of FY2008/09 second-quarter financial results 3 NOV Analyst briefing on FY2008/09 second-quarter financial results 22 +03&%0
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Singapore’s aerospace industry hit a record output of US$6.9 billion, contributing 25% of the Asian aerospace MRO market

THE GLOBAL AIRLINE INDUSTRY IN 2007 The low cost carriers, while previously serving 2007 was a good year for airlines around the world the regional market, have started expanding their as earnings hit US$5.6 billion with revenues of portfolio to cater to the long haul flight demands, US$490 billion. hence fanning up the competitive heat for the existing international airlines. Asia continued to be boosted by growth in rapidly developing markets like India and China, both THE GLOBAL AIRCRAFT MARKET Demand for of which are home to some of the industry’s newer and more advanced aircraft has increased, strongest carriers and possess some of the newest especially in Asia, making it a battlefield for Airbus airport infrastructure. With more than half of the and Boeing. Together, they hit an industry record world’s population in Asia, air transport continues of nearly 2,750 aircraft orders in 20071. to play a pivotal role in Asia’s economy. Boeing set a record with 1,413 airplane orders to The Middle East is another centre of aviation 80 countries, surpassing its previous orders of buzz, as shown by its growth in passenger 1,044 and 1,002 in 2006 and 2005 respectively2. demand. Currently, Dubai serves 35 million It delivered 441 commercial aircraft, an increase passengers annually and has connecting points of 11% from the previous year, contributing an 8% in 159 destinations. Middle East, Africa and rise in its year-on-year revenue to US$66.3 billion3. South Asia are spending US$68 billion on The Boeing 787 Dreamliner, the fastest selling airport infrastructure. plane in history, enjoyed a record setting year with 369 orders. However, the B737 had the strongest Passenger traffic demand in Latin America gained sales in history with a net order of 846 planes. a solid 8.4% growth from a 2.4% fall in 2006, emphasising the strong recovery from the effects Airbus achieved net orders of 1,341, representing of restructuring in the region. North America 49% of the market share4. Having delivered a total witnessed a 5.5% growth as compared to 5.7% in of 453 aircraft, Airbus maintains its pole position 2006 as the region’s carriers transfer capacity to in aircraft deliveries. With orders of over 3,400 more lucrative international markets. aircraft, Airbus is ensured full production for the next six years at increasing rates. In 2007, there Global airfreight traffic slowed to 4.3%, lower are 33 firm orders for A380, totalling to 186 firm than the 4.6% recorded in the previous year. orders from 16 customers5. Middle East led all regions with a 10.1% increase in airfreight demand, down sharply from 16.1% in 2006. The slowdown highlights the increasing 1 The Business Times, 28 February 2008 competition from sea freight that has faster ships 2 Boeing – Press Release, 3 January 2008 and cheaper fuel costs to its advantage. 3 Boeing – Press Release, 30 January 2008 4 Airbus 2007 Results, 16 January 2008 5 Airbus Annual Report 2007

24 departure flights, there is a need for Changi Airport to expand9. The opening of Terminal 3 in January 2008 has added capacity of 22 million passengers a year, bringing the total capacity of Changi Airport to 70 million passengers a year, which almost doubles the passenger traffic of 200710. On the cargo front, 1.89 million tonnes of airfreight was handled11. This marginal slowdown of 0.9% compared to 2006 is mainly due to the softening demand for electronics in the US and the growing preference for sea freight. Changi Airport won “Best Airport in the World” for the 20th consecutive year since 1988. The new Budget Terminal also clinched an award with the “Best Low Cost Airport” in the World Low Cost Airlines Congress. THE MRO INDUSTRY IN SINGAPORE – A GLOBAL AEROSPACE HUB Singapore’s aerospace industry hit a record output of US$6.9 billion last year with 10.4% growth from 200612. Controlling 25% of the Asian aerospace MRO market, Singapore is the largest and most comprehensive MRO hub in Asia. Singapore’s dominance in aviation owes much to Changi Airport’s position as a pan-Asian aviation hub and Singapore Airlines’ stellar performance. Since 1995, Seletar Airport has been rising in prominence as the other aviation hub in Singapore, Escalating fuel prices, costs and highly competitive specialising in smaller planes and charter flight market conditions have spurred the demand for operations. Its Aerospace Park will expand increasingly efficient aircraft operations. Expectedly, Singapore’s aviation capabilities from MRO to the there is now a greater call for more environmental highly lucrative fields of manufacturing and design, friendly aircraft to lower the costs of the airline. as well as aviation training. Boeing and Airbus are working on alternative fuels that are less expensive and environmental friendly6. 6 Rolls-Royce, together with Singapore consortium, Business Times, 21 February 2008 7 Edubourse, 19 February 2008 Enertek, is investing US$100 million in developing 8 Thomson Financial News, 28 January 2008 a commercially viable power system based on fuel 9 The Straits Times, 27 November 2007 cell technology7. 10 Fact Sheet on Terminal 3, Singapore Changi Airport, 29 May 2007 AIR TRAFFIC AT CHANGI AIRPORT In 2007, 11 Changi Airport – Press Release, 28 January 2008 Changi Airport handled record passenger traffic 12 The Straits Times, 20 February 2008 of 36.7 million, up almost 5% from the previous year8. Handling a total of 4,300 weekly arrival and

25 26 twice the current total of 13,28415. The US and Asia looks forward China will be the biggest aircraft customers with to more liberalisation 5,800 and 3,000 aircraft respectively. Britain will be the third largest customer for new aircraft with of air traffic between 1,100 jets. A third runway is slated to be built by 2020 in Heathrow airport to accommodate the capital cities additional aircraft. In view of its strong performance in 2007, the global As a display of its confidence in Singapore’s airline industry is expected to be more subdued aerospace dominance, Rolls-Royce is building for 2008. Nevertheless, Asia looks forward to more an engine production facility in Seletar Aerospace liberalisation of air traffic between capital cities. In Park. “Facility of the Future” is Rolls-Royce’s first December 2008, ASEAN members are looking to open technical facility in Asia and the most modern the skies for its member countries and by year 2010, Rolls-Royce engine assembly and test facility they will grant each other “fifth freedom” rights16. for large commercial aero engines13. DEVELOPMENTS AHEAD Commercial jet orders are 13 Edubourse, 19 February 2008 expected to decrease in 2008 after its historically 14 The Business Times, 28 February 2008 high levels in the past two years14. Both Boeing and 15 The Guardian, 8 February 2008 Airbus’ order books will see them through to 2012. 16 12th ASEAN Summit, 3 May 2007 & Straits Times, Airbus predicts that 28,534 passenger and freight 29 March 2008 aircraft would be flying in 2026, which is more than

27 As a key pillar of the local aerospace industry, MRO is big business in Singapore. Singapore is also Asia’s largest and most comprehensive MRO hub, accounting for a quarter of the MRO market in Asia. Playing a large part in propelling Singapore as a global MRO hub is the exciting mix of world-class local and international companies that have chosen to anchor and ply their trade here. Execujet, Aeroflex and Goodrich have recently opened their facilities here to provide more timely services to their customers in the region. BJETS, a private jet operator will begin its operations from Singapore in 2008. With an increasing number of aviation companies setting up facilities in Singapore, sufficient human resource is necessary to support the growth of the aerospace industry. An estimate of 1,500 new people a year is needed but there are currently only 1,350 aerospace graduates in a year. SIM University will be launching an Aerospace Systems Engineering degree in July 2008 to develop industry-ready graduates to cater to the demand. 28 )<')00)2')
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 Strong demand at Singapore hub, overseas operations spread to more than 40 airports

LINE MAINTENANCE During the year in review, to more than 189 cities in 60 countries by more the SIA Engineering Company’s team of 308 than 82 airlines operating here. The number of licensed aircraft engineers and 1,290 technicians scheduled flights has reached approximately at Line Maintenance Division serviced a total of 4,300 arrival and departure flights per week. 95,641 flights, a 6% rise from the previous year. New Customers During the year in review, we Serving an international client base of more secured five out of the six airlines that inaugurated than 60 airlines at Singapore Changi Airport, services to Singapore. A total of 21 new contracts our engineers and technicians provide aircraft was secured, including Air Atlanta Icelandic, Air certification and ground handling services, Bagan, Air Sahara, Euroatlantic Airways, Etihad ensuring high despatch reliability for aircraft on Airways, Dragonair, Futura Airlines, Jetstar transit and night-stop at Changi. (Australia) International and Transaero Airlines. We also signed contracts with Rolls-Royce Changi Airport saw a record number of 36.7 million and Pratt & Whitney to support their respective passengers and 1.89 million tonnes of cargo On-Wing Care and Global Service Partners handled in 2007. Today, the airport is connected programmes. Under the contracts, the engine makers will refer airlines encountering engine problems to SIA Engineering Company, thereby increasing our revenue streams. Servicing China Registered Aircraft For Chinese carriers operating outside China, the Civil Aviation Authority of China (CAAC) stipulates that only CAAC-licensed engineers are allowed to certify China-registered aircraft. Up till recently, Chinese carriers have to give up one commercial seat for a flight observer on every flight. In view of such regulations, SIA Engineering Company engaged its own CAAC-licensed engineers. Now, we are able to perform certification services for our Chinese airline customers, such as Air China, China Eastern, China Southern, Shanghai Cargo Airlines, Shenzhen Airlines and Yangtze River Express.

30 Line Maintenance Capabilities in Singapore and Overseas Name Location Line Maintenance Capabilities SIA Engineering Singapore Aircraft: Company Airbus A300B4, A300-600, A310-series, A320-series, A330- series, A340-200/300-series, A340-500/600, A380 Boeing B727-series, B737-series, B747-series, B747SP, B757-series, B767-series, B777-series, MD11 Fokker F70 Bombardier Learjet Engine: General Electric GE CF6-50/80/80E, CFM56, GE-90 IAE V2500 Pratt & Whitney PW4000, PW2037, PWJT8D, PW JT9D Rolls-Royce Trent 500, Trent 700, Trent 800, Trent 900, RB211 Honeywell TFE731 Aviation The Philippines Aircraft: Partnership Airbus A320, A319 (Philippines) Boeing B777-200/300 Corporation ATR ATR72 Engine: General Electric CFM56-5B IAE V2500 Pratt & Whitney PW127M Rolls-Royce Trent 800 Aircraft Australia Aircraft: Maintenance Airbus A300-B4/600, A310, A319, A320, A321, Services Australia A330-200/300, A340-200/300/500/600, A380 (AMSA) Boeing B727, B737-series, B747-series, B767-series, B777-series, BMcDC9/10, MD11 Fokker F27, F28, F50, F100 Engine: General Electric CF6, CFM56, GE90-115 IAE V2500 Pratt & Whitney PW4000, PWJT3D, PWJT8D, PWJT9D Rolls-Royce Trent 500, Trent 600, Trent 700, Trent 800, Trent 900, RB211, Dart, Spey, Tay Pan Asia Pacific Hong Kong Aircraft: Aviation Services Airbus A310, A319, A320, A321, A330-200/300, Limited (PAPAS) A340-200/300/600 Boeing B737-400, B747-200/200F/400/400C/400F, B757-200ER, B767-300, B777-200/300/ER Engine: General Electric CF6-50/80, CFM 56, GE90 IAE V2500 Pratt & Whitney PW4056, PW4168, PW4152 Rolls-Royce Trent 500, Trent 700, Trent 800, RB211524/535 PT JAS Aero- Indonesia Aircraft: Engineering Airbus A300, A310, A319, A320, A330, A340-500 Services (PT JAE) Boeing B737, B747-400, B757-200, B767-200, B777-200, B777-300ER Engine: General Electric CF6, CFM56, GE90-90B, GE90-115 IAE V2500 Pratt & Whitney PW4000, PW4168, PWJT8D Rolls-Royce Trent 500, Trent 700, Trent 800 31 Responding to AOG Around the World Our Quick The combined number of ‘C’ checks increased Action Team (QAT), a specialised team of experts due to stronger third-party work. The number of ‘A’ who are ready to respond to aircraft-on-ground checks decreased from 401 to 345 as a result of a (AOG) situations around the world, 24 hours a day, revised maintenance schedule that extended the seven days a week, had a busy year, including eight intervals between checks. Though the number of AOG engine changes for various airline customers ‘D’ checks came down, the checks performed were in Singapore and overseas, like Dubai, Frankfurt, longer and more intensive in nature, which led to an Kansai, Manchester, Shanghai and Stockholm. increase in man-hours for the checks. Greater Network Support – Line Maintenance Overseas Joint Ventures We are providing line Number of checks performed maintenance and technical handling at more than 600 40 airports in five countries. With the acquisition of AMSA in the financial year, we extended services 500 for the Airbus A380 in Australia when it took its first commercial flight to Sydney. 400 Our overseas line maintenance joint ventures serve 401 345 to provide our customers with greater network 300 support in maintenance services. AIRFRAME MAINTENANCE In FY2007/08, SIA 200 Engineering Company conducted a total of 345 ‘A’ checks, 143 ‘C’ checks and 27 ‘D’ checks. 100 136 143

35 27 0 FY06/07 FY07/08 A Checks C Checks D Checks

New Contracts During the year, we clinched new third-party contracts (including renewals) amounting to $311.6 million. New customers include Gulf Air, Transaero Airlines, Air Bridge Cargo, Kenya Airways, Avitas and Jetstar Airways. We renewed our contract with Japan Airlines to maintain their fleet of Airbus A300-600 aircraft. Other renewals include Dubai Air Wing, Air Canada and Qantas Airways. Upgrade of Facilities In March 2007, the first Boeing B777-300ER aircraft from Singapore Airlines (SIA) was serviced at Hangar 3, which has specialised dockings for the B777-300ER’s wider wingspan and larger General Electric engines. In view of the increased number of B777 checks, particularly from SIA, as well as third-party customers like Air India and Saudi Arabian Airlines, we have installed a new set of B777 dockings in Hangar 2.

32 Maintaining the Airbus A380 The world’s first All aircraft have to make regular scheduled visits superjumbo, Airbus A380, which SIA took delivery to the hangars to maintain their airworthiness in October 2007, will undergo light to moderate certifications with international regulatory bodies, maintenance checks in the initial years. Provisioning such as the Civil Aviation Authority of Singapore, of heavy equipment, such as tow tractors, ground the Federal Aviation Administration (United States), power units and aircraft jacks for handling the European Aviation Safety Agency (European Union) mammoth aircraft has been completed. The and Japan Civil Aviation Bureau (JCAB). Company now has the capability to support the SIA Engineering Company currently runs five hangars Airbus A380’s initial 24 months of operations, at Changi Airport and offers a comprehensive suite including its 750-hour and “C” checks. About 200 of capabilities, including scheduled maintenance Licensed Aircraft Engineers and Technicians have checks (A, C and D checks), airframe structural been trained and certified to service the A380. repair and modification, cabin overhaul and refurbishment, and retrofitting of major avionics On 24 January 2008, SIA Engineering Company’s systems. In addition, we deliver essential engineering team of qualified A380 Licensed Aircraft Engineers services, such as emergency aircraft-on-ground and Technicians undertook the first 750-hour check (AOG) support, at airports around the world. for SIA’s first A380. Modifications to the Flight Crew and Cabin Crew Rest Compartments, and a scheduled engine change were carried out during the check. The aircraft check was completed on schedule. FOR A TYPICAL AIRCRAFT: With the experience of the first A380 maintenance “A” check – required every 600 flying hours check, an even more intensive check that (approximately 2 months) included the In-Flight Entertainment System was “C” check – required every 7,500 flying hours accomplished successfully in February 2008 for (approximately 20 months) SIA’s second A380. “D” check – required every 25,000 flying hours (approximately 5 years) Construction of the A380 maintenance facility – our sixth hangar – is in progress and is expected to be

33 operational in the second half of 2008. Designed Passenger-to-Freighter (PTF) conversion involves with LEAN principles that maximise efficiency and the removal of the entire interior, including seats and productivity in the workplace, Hangar 6 has space galleys, plugging of the windows, removing unused provisions for on-site repairs and efficient component aircraft systems, and installing a large cargo door flow to and from the workshops. and cargo loading systems. The completion of Hangar 6 will increase our total As such, PTF conversion is very knowledge- airframe maintenance capacity by a further 10%. intensive and production oriented. Our engineers and technicians are required to interpret detailed aircraft drawings and possess high production skills. To OUR HANGARS SPECIALISATION (total capacity 49,700 square metres) ensure our people have the necessary skill sets and knowledge inventory, we collaborated with Boeing to Hangar 1 – B747 heavy maintenance train our technical teams. Hangar 2 – Airbus zonal checks During the year, SIAEC completed a total of three Hangar 3 – B777 heavy maintenance B747-400 conversions, which were delivered Hangar 4 – B747 heavy maintenance and to Dragonair. We also significantly reduced the Passenger-to-Freighter conversions turnaround time from 163 days to 106 days with Hangar 5 – B747 and B777 heavy maintenance process improvements as we moved up the learning Hangar 6 – A380 and B747 checks curve. The Company has another three more Boeing B747-400 from SIA to convert into freighters for SIA Cargo. BOEING B747-400 PTF CONVERSION Converting With new-generation aircraft such as the Airbus jumbo jets used for carrying passengers to all- A380 and Boeing 787 Dreamliner gaining popularity, cargo freighters is a complex process. As it involves the replacement market for Boeing B747-400 strengthening of the floorbeams to take on heavier passenger aircraft is strong, particularly with its cargo loads, the conversion operation is technically potential as fuel-efficient cargo planes. detailed, laborious and time-critical. In addition,

34 COMPONENT OVERHAUL team to support customers based overseas. Besides receiving components at the workshops, Increasing Revenue Streams Our Workshops we also go onsite to conduct repairs. Recently, our Division, comprising 22 in-house workshops with staff flew to Yangon to conduct cabin repair work state-of-the-art equipment to repair and overhaul on an ATR42 aircraft. Within Singapore, our staff more than 26,000 part numbers, is actively were also sent to repair a composite wing tip at targeting non-traditional revenue sources, including Seletar Airport. performing warranty repair work on behalf of original equipment manufacturers (OEMs) like B/E There is also an increasing trend for airlines to Aerospace, CAE, General Electric and Iccobucci. have a single point of contact for their outsourcing requirements. Tapping on our strength in finding the As the MRO partner of SIA, the Group has the right vendors at competitive prices, we offered the unique opportunity to engage these OEMs to Repair Vendor Management services to take care of appoint us as their repair centre so that we can airlines’ subcontracting needs. perform the warranty work in-house for SIA and other airline customers. Component Capabilities for Airbus A380 To support our major customer SIA, which operates the largest During the period in review, we also conducted fleet of Boeing B777 in the world, we have rapidly panel refurbishments for a Saudi Arabian aircraft built up an extensive component overhaul capability undergoing a heavy maintenance check in Kuala for the B777. In addition, we have also geared up Lumpur; a set of landing gears for Balli Group PLC our test component capabilities for the A380 super- (a UK based company); component support work jumbo aircraft. In pursuit of this, a series of training for commuter aircraft; cabin panel refurbishment programmes in specialty areas of thermoplastics, work from MRO facilities in Seletar Airport, as well airframe composite repair, flight controls, landing as radome repair for ATR airplanes. gear and simulators were conducted. To date, the Another major development in the area of Company has a total of 139 staff who have acquired component overhaul is the formation of a mobile

35 capabilities to service A380 ATEC components, solutions, component repair and overhaul services, wheels and brakes, seats and galley inserts, logistics and supply chain management. SIA and to perform composite repair. Engineering Company’s FMP enables a seamless integration of world-class airframe and engine TOTAL COMPONENT PART NUMBERS: maintenance and overhaul facilities to offer a more than 26,000 complete and convenient one-stop shop to fulfill B747 capability : 15,385 part numbers the MRO needs of our diverse customer base. B777 capability : 4,225 part numbers In FY2007/08, we extended our FMP territorial A340 and : 6,390 part numbers coverage to Australia to support Tiger Airways. A380 capability The FMP contract with Cebu Pacific Air was also extended to cover an additional 18 aircraft. ENGINE OVERHAUL Engine overhaul is a very As at 31 March 2008, we have seven airlines in complex operation that requires highly specialised our FMP customer base covering 109 aircraft. This technical know-how. Hence we have forged ten comprises 57 aircraft in service and the remaining joint ventures with the world’s leading engine 52 awaiting delivery to the airlines. and engine component manufacturers, including Rolls-Royce and Pratt & Whitney, to deepen AIRCRAFT IN SERVICE AS AT 31 MARCH 2008: our service offerings. Out of the ten engine and engine component overhaul joint ventures, seven Airbus Fleet (A319/A320) are located in Singapore. They are Asian Surface SilkAir 14 Technologies, Combustor Airmotive Services, Tiger Airways 12 Eagle Services Asia, International Aerospace Tubes Cebu Pacific Air 16 - Asia, International Engine Component Overhaul, Go Air 4 Singapore Aero Engine Services and Turbine Mandala 6 Coating Services. The other three are located in Boeing Fleet (B747-400) Taiwan, Hong Kong and Ireland. Air Pacific 2 FLEET MANAGEMENT PROGRAMME SIA Great Wall Airlines 3 Engineering Company’s complete suite of offerings and experience in servicing a wide A recent addition to our expanding MRO range of commercial aircraft, including the most service scope is the VIP aircraft cabin interior advanced fleets in the world, strongly positions the reconfiguration programme, which commenced Company to capitalise on the trend of increasing with a large-scale job for a Boeing B747-400 MRO outsourcing by airlines through our Fleet Combi aircraft. This project was undertaken with Management Programmes (FMP). expertise from our joint venture company, Jamco Customisation of Maintenance Plans FMP offers Aero Design & Engineering Private Limited (JADE) comprehensive and multi-layered engineering and and other major aircraft system OEMs. It involves MRO solutions that can be customised to provide the engineering, modification and airworthiness partial or total maintenance support to airlines. certification of a production aircraft to incorporate a VIP lounge, customised passenger accommodation, Comprising Fleet Technical Management and state-of-the-art In-flight Entertainment System and Inventory Technical Management, our FMP provides a Satellite Communication capability. engineering and maintenance support activities, including formulating and up-keeping of aircraft maintenance programmes, maintenance planning, engineering design, consultation, quality and reliability programmes, 24/7 maintenance control, Aircraft-on-Ground support, materials support

36 )<')00)2')
-2 >@<<;=?
6:3=.>?=@0?@=2 Our people, along with an efficient IT backbone, are central to our delivery of high quality and quick turnaround times

INFORMATION TECHNOLOGY The Company the inculcation of a continuous learning culture. successfully completed the SAP system We focus on equipping our staff with the relevant upgrade in November 2007. The new SAP skills and knowledge to keep abreast with the software incorporates enhanced features and technological developments in the industry. enables greater software compatibility with third- On 13 December 2007, SIA Engineering Company party products. became a pioneer member of the exclusive Airbus A BayWatch system was successfully rolled out in Maintenance Training Network. As an accredited December 2007. It provides graphical display of Airbus Training Centre, our standard of training is aircraft location and serviceability status at Changi recognised internationally to be on par with Airbus’ Airport on a real-time basis, thereby enhancing and we enjoy access to Airbus latest training the Company’s level of customer service and methodology. SIA Engineering Company became manpower deployment. the first in the world (outside Toulouse) to embark on a new and more effective training As part of the Company’s ongoing efforts to methodology known as Airbus Active Learning improve aircraft component repair cycle time, and Competence-Focused Training (AACT). we are embarking on the implementation of a Radio Frequency Identification (RFID) tracking, Using the AACT, we successfully conducted our reporting and analysis system. With the system, first in-house Airbus A380 maintenance course there will be greater visibility on the repair status from November 2007 to March 2008. of components at any point in time. Critical The AACT uses advanced graphical simulation information can also be transmitted more tools, such as the 2D Maintenance/Flight Training effectively between the hangar operations and Devices and the interactive Virtual Aircraft, the workshops that are repairing the components. to provide hands-on experience that is not This initiative also serves as a platform to prepare possible through conventional training methods. the Company for technologically advanced This significantly reduces the learning curve of aircraft, such as the Boeing Dreamliner, which will our engineers and technicians undergoing training have more than 2,000 RFID-enabled components. and gives us the competitive edge over other TRAINING Our training programmes are designed MRO providers. to unlock the full potential of each individual. During the year in review, 156 Apprentice Aircraft As a People Developer certified by Spring Maintenance Engineers (AAMEs) successfully Singapore since 1999, SIA Engineering Company completed our apprenticeship programmes and is fully committed to workforce development and

38 graduated as Licensed Aircraft Engineers. Another human resources As a leading MRO company 300 AAMEs are in various stages of completion in in the Asia-Pacific, SIA Engineering Company the 3-year AAME programme. recognises that its workforce is its most vital and valuable asset. We need a dedicated, committed In addition, 242 Trainee Technicians graduated as and highly skilled workforce to drive excellence full-fledged Aircraft Technicians during the financial and quality delivery in the work that we do. It is this year. The Trainee Technician programme is a one- drive towards excellence that sets SIA Engineering year course and there are 300 trainees currently Company apart from the competition and positions enrolled in the programme. the Group for greater achievements. Senior technicians are given the opportunity to be Staff Development The Company has successfully trained under the Certifying Technician programme. renewed its People Developer Certification for This is a 7 to 11-month programme, depending on another three years (2008 to 2011). In FY2007/08, operational requirements. Certifying Technicians we invested $9 million in technical and management are trained to take on some of the Licensed skills training. Other avenues for staff development Aircraft Engineer’s responsibilities. This allows include on-the-job training, participation in special the Engineers to focus on more complex projects, overseas postings and job rotations. In troubleshooting and also increases the productivity addition, mentorship and coaching programmes of our technician workforce. To date, we have have helped to provide guidance to staff in their trained 208 Certifying Technicians.

39 personal growth and career advancement within Another new initiative, the STAR Employee Award, was the Company. launched on 1 October 2007 to recognise outstanding engineers, technicians and clerical staff from the Two new initiatives, the “Buddy” and “Mentor” three operational divisions (Base Maintenance, Line schemes, were introduced to improve the learning Maintenance and Workshops) on a quarterly basis. environment for the AAMEs. These two schemes The award is given to staff who exemplified excellence involve partnering a junior apprentice with a in their work, rendered care and service beyond their technical instructor (Mentor) and a senior apprentice normal course of duty and consistently demonstrated (Buddy) from the same technical specialisation. the Company’s core values. Regular dialogues are conducted between them, and the junior apprentice is encouraged to bring To instill in the workforce a sense of “esprit de up issues that he encounters during training. These corp”, the Company organised its first SIAEC two initiatives have helped our junior apprentices Staff Carnival on 28 July 2007 at the Singapore adapt much faster to the work environment, as well Zoological Gardens, with activities that encouraged as accelerated their learning during apprenticeship. teamwork and innovation. The event attracted a In the long run, this will improve the quality of the total participation of 10,000 staff and their families. AAMEs that graduate from our training programmes. Industrial Relations The implementation of workplace transformation initiatives has emphasised We continually engage the need to work closely and jointly with our Unions. After almost one and a half years’ of close our workforce at collaboration in developing, implementing and fine-tuning these initiatives, the Company and every level to integrate its Unions have forged strong bonds based on transparency, understanding and staff engagement. the Company’s goals Regular meetings, interspersed with impromptu with our daily operations. discussions and informal gatherings, have helped in the resolution of issues that were surfaced. Such interaction is crucial in ensuring a healthy Employee Engagement To facilitate understanding and harmonious industrial climate and has become and integration of the Company’s objectives, it is an integral part of our working relationships. The critical to ensure that our workforce is continually Company strives to bring its partnership with the engaged. SIA Engineering Company places a strong Unions to greater heights and achieve a win-win emphasis on employee communications, which situation for both the business and our employees. include regular meetings with the Unions and staff, informal gatherings, company-wide events such as Recruitment Our apprenticeship schemes, the Staff Carnival, sporting activities and sharing of specifically the Apprentice Aircraft Maintenance information through various media. Engineer (AAME) and Trainee Technician (TT) Schemes, have fulfilled most of our technical During the year in review, the Company continued manpower requirements. In view of the Company’s with its Let’S PEAK programme, which was plans to add capacity in the near future, we explored launched in October 2006. A total of 500 staff new schemes to meet our growing demand for attended the programme, which aims to equip all engineers and technicians. These included tie-ups supervisory staff with the skills to manage and with the local polytechnics, which offer aerospace- build effective working relationships. Through the related diploma courses that qualify for credits programme, staff learn to conduct more effective from CAAS. These graduates will be able to join communication sessions and to exhibit leadership SIA Engineering Company on an abridged AAME skills to their subordinates. scheme. The Company has also been working closely with the Institute of Technical Education

40 (ITE) to develop a National ITE Certificate (NITEC) Aviation Administration (FAA), European Aviation in Aerospace Technology programme, which will Safety Agency (EASA), General Administration of serve as an effective feeder for our TT programme. Civil Aviation of China (CAAC), India Directorate General of Civil Aviation (DGCA) and newly obtained At the management level, the Company has stepped approvals from Australia Civil Aviation Safety up its recruitment of experienced mid-career Authority, Bangladesh Civil Aviation Authority, managers and executives to complement and Bermuda Department of Civil Aviation, Myanmar strengthen our existing team by bringing expertise Department of Civil Aviation and Vietnam Civil from various industries. Aviation Administration. QUALITY, SAFETY, SECURITY AND In April 2007, our Environmental Management PRODUCTIVITY Constant reviews of our work System was converted to comply with ISO procedures ensures that a high standard of service 14001:2004 standards. and quality is maintained. In September and October 2007, the Safe Act Walk From January to December 2007, the Quality and and Accident Prevention campaigns were held to Safety Division conducted a total of 147 internal accentuate the importance of adopting safe work audits on various operating areas within the Company. practices and a proactive attitude towards the During the same period, there were a total of 100 prevention of accidents. external audits, including 67 conducted by our airlines and MRO customers, 30 by airworthiness regulatory We continued to evaluate security measures bodies and three by other certification bodies. for our facilities in 2007. Their effectiveness is highly dependable on the reliability of the security We currently hold regulatory approvals from 24 equipment installed and the enforcement by our national aviation authorities and 26 airlines and security force. Hence, steps were taken to install customers. Regulatory approvals include the Civil newer CCTV cameras in the hangars. In early 2008, Aviation Authority of Singapore (CAAS), Federal security upgrading was completed in Hangars 4

41 and 5, with the installation of Pan-Tilt-Zoom cameras to auto-pan and focus on critical areas. In December 2007, we embarked on a month-long campaign – Quality Supervision, Winning Teams – to reinforce the concept of high quality and high safety standards in the workplace. Road shows were held, together with talks by consultants, to engage staff in dialogue sessions to enforce the need for quality supervision. The Company has also recently embarked on an initiative to work with our joint venture companies on their security enforcement. PAPAS (Hong Kong) and Singapore Jamco are the first two companies we are working with under this programme. Our Productivity Unit has been actively engaging the Operational divisions (Base Maintenance, Line Maintenance and Workshops) in coming up with ways to eliminate wastage in their business processes and to stay relevant in the MRO industry. Productivity Unit also conducted regular courses to educate our workforce on the principles of LEAN management through hands-on activities. To date, we have trained a total of 349 employees.

42 Corporate Social Responsibility

ENVIRONMENT MANAGEMENT At SIA Engineering MRO work involves activities that potentially have Company, we are focused on balancing our goals an environmental impact, such as wastewater of creating value in our business with a strong discharge, handling of chemicals and toxic waste commitment to minimise the impact that our disposal. As part of our EMS, we have taken business activities have on the environment. measures ranging from maintaining records of toxic waste disposal to ensuring that sufficient spill It is therefore our priority to closely monitor and kits are available. Staff awareness is key in any manage our Group’s environmental performance. management system of this nature. For example, Carbon emissions, climate change, noise pollution, all staff have easy access to the Material Safety air quality and waste management continue to be Data Sheets posted at the Chemwatch website. the main priorities of our environment management This encourages them to learn about the hazards strategy. With a moral obligation to look after the and the proper measures to handle a wide range of health of our staff and the long-term sustainability chemicals used in the workplace. of our environment, we have put in place an Environment Management System (EMS). The review of our environmental performance covers three main areas, namely, energy and water Our EMS ensures that work processes are in conservation, wastewater management and solid compliance with environmental regulations. waste management. Since April 1998, we have in place the ISO 14001 certification, which affirms that our management Water Conservation With close to 6,000 employees of environmental issues is in accordance with in Singapore, the amount of resources consumed international best practices. is substantial and hence we have been very proactive in the conservation of water resources

43 Promotion and facilitation of waste reduction are conducted through new and ongoing efforts aimed at reducing usage, reuse and where possible, recycling.

Management of Waste We have a comprehensive environmental action plan that includes an integrated waste management programme for handling hazardous substances and reducing waste. Promotion and facilitation of waste reduction are conducted through new and ongoing efforts aimed at reducing usage, reuse and where possible, recycling. Paper usage has been reduced by 6.6% from FY2006/07 to FY2007/08. To encourage further reduction, a paper-recycling scheme is in place to recycle all paper type waste generated in our offices. COMMUNITY OUTREACH The Group firmly believes in giving back to the community and encourages staff to be active in supporting the needy. in our operations. One measure implemented was The SIA Community Service Club (CSC), comprising the installation of water-saving devices to existing volunteers from the SIA Group, provides a platform taps at our hangars to reduce the water flow rate for staff of SIA Engineering Company to extend a from 5-7 litres to 3 litres per minute. Others include helping hand to the community. In the past year, collection of rainwater in water tanks on hangar CSC organised a total of 14 events for organisations rooftops, which is then used for general cleaning such as the SIA Minds Employment Development and watering of plants. Centre, Geylang East Home of the Aged, SILRA, Wastewater Management Our hangars are equipped APSN/Touch Ubi and Brighthill. Activities such as with stand-alone wastewater treatment plants where outings, games, karaoke are arranged to spread wastewater is treated to ensure it complies with the joy to the less fortunate. On special occasions like legal requirements before it is discharged into the Christmas and Chinese New Year, gifts and hampers public sewer system. The wastewater treatment are also given out. facilities in Hangars 4 and 5 were recently upgraded Our staff are also given the opportunity to pledge with a Carbon Filter to further reduce the Chemical monthly donations to the Community Chest Oxygen Demand in the discharged water. Another of Singapore. In the last three years, a total of $1.5 million will be invested in a new wastewater $258,455.26 was collected for the charity. treatment plant for Hangar 1.

44 )<')00)2')
-2 <.=?:2=>56<> The 21 joint ventures span across seven countries and contribute more than half of the Group’s pre-tax profits

AEROSPACE COMPONENT ENGINEERING ASIAN SURFACE TECHNOLOGIES PTE LTD SERVICES PTE LTD SIA Engineering Company: 39.2% SIA Engineering Company: 51% PAS Technologies: 40.8% Parker Hannifin Corporation: 49% Pratt & Whitney (United Technologies Group): 20% Aerospace Component Engineering Services Asian Surface Technologies Pte Ltd (AST) Pte Ltd (ACE Services) specialises in the repair, repairs and overhauls fan blades for JT9D and overhaul, test and recertification of hydraulic PW4000 series engines. It also provides plasma pumps, flight control actuators, servo-control coating services for aerospace and industrial actuators and thrust reverser actuators. engineering products in the Asia-Pacific region. AST uses cutting-edge technology, such as ACE Services is the first in the region to provide Praxair’s proprietary D-gun processes, for its OEM MRO support of Parker hydro-mechanical coating services. It holds approvals from CAAS components. The 33,000 square feet facility in Singapore, FAA in the US and EASA in Europe. has state-of-the-art equipment and is capable AST is AS9100 registered, Nadcap accredited, and of handling 5,000 psi hydraulic system pressure, is an approved source for all major aviation OEMs. thereby enabling it to support new generation aircraft, like the Airbus A380 and Boeing 787 COMBUSTOR AIRMOTIVE SERVICES PTE LTD Dreamliner. SIA Engineering Company: 49% Pratt & Whitney (United Technologies Group): 51% Since operations started in 2005, ACE Services has successfully obtained certifications from Combustor Airmotive Services Pte Ltd (CAS) is several aviation authorities, including Civil Aviation a world-class combustor and fuel nozzle repair Authority of Singapore (CAAS), Federal Aviation and overhaul centre. Its capabilities include Administration (FAA), European Aviation Safety complete overhaul, repair and modification of Agency (EASA), Civil Aviation Authority of China PW4000, JT9D, PW2000, JT8D, V2500 and (CAAC), Department of Civil Aviation Malaysia CFM56 combustion chambers, fuel nozzles, (DCA Malaysia) and Department of Civil Aviation PW4000 Stage 3 Low Pressure Turbine duct Thailand (DCA Thailand). assemblies, PW4000 High Pressure Turbine Stage 1 supports, Heat Shields and Band Segments. ACE Services has been building up its repair Its extensive capabilities have enabled CAS to capabilities and is currently capable of providing provide its customers with high quality repairs, fast MRO support services to more than 200 Parker turnaround times and competitive pricing. hydro-mechanical components. ACE Services will continue to develop and add further capabilities The entire workforce, from shop-floor technicians to its list. to engineers and management team, embraces

46 the Achieving Competitive Excellence (ACE) culture, OEM – Pratt & Whitney (PW) – with the extensive using its strategies and tools for all key processes. maintenance capabilities of an airline-linked ACE has greatly contributed to the success of the MRO provider – SIA Engineering Company. The organisation and the improvements have propelled twinning of the two leading organisations has CAS to become a world-class repair and overhaul enabled ESA to establish itself as one of the largest centre. In March 2007, CAS achieved the ACE MROs in Singapore and as the key PW Engine site Gold status under the new Pratt & Whitney Centre specialising in the repair and overhaul of ACE criteria. JT9D and PW4000 (94” and 100”), as well as GE90-115B engines. Much emphasis has also been given to the health, safety and welfare of its employees. ESA celebrated its 10th anniversary in 2008. Since For its company-wide health programme efforts, inception, sales have increased more than four- CAS received a Gold Health Award from the fold. More than 2,100 engines have been tested Singapore Health Promotion Board. In 2007, CAS and shipped, turnaround time on engine overhaul received a Silver award from the Singapore Ministry has been reduced by half and its employee group of Manpower in its Annual Safety and Health has expanded by more than 40% to meet a larger Performance. In addition, CAS received a Silver customer base. These facts reflect the development award at SMA-WSHi Innovation Presentation for of an innovative and leading-edge organisation its introduction of the Contractor Corner, which committed to offering integrated and customised is dedicated for the briefing of contractors on the engine servicing and overhaul solutions for a global safety policies in the facility. In driving safety as a customer base. value, CAS logged 1.6 million hours of work without Being the first engine overhaul centre among injury or lost time since 2002. PW’s worldwide facilities to be awarded the EAGLE SERVICES ASIA PTE LTD Achieving Competitive Excellence (ACE) Silver SIA Engineering Company: 49% status, ESA continues to strengthen its competitive Pratt & Whitney (United Technologies Group): 51% edge through the rigorous application of United Technologies Corporation ACE programme. In 2007, Eagle Services Asia Pte Ltd (ESA) combines the ESA was awarded the Lifelong Learner Award from technological prowess of a world-renowned engine

47 the Singapore Workforce Development Agency and Operating out of its state-of-the-art facility in achieved recognition for having reached more than Changi North, GASCA’s capability extends to one million hours worked without lost time injury. virtually all commercial aircraft models today and The many other awards in ESA’s 10-year history serves more than 120 airlines and other customers include the Singapore Environmental Achievement in the Asia-Pacific region. GASCA expanded its Award, Singapore Health Award and Occupational facility to 550,000 square feet and hosts the aircraft Health Best Practice Excellence Award. component and systems maintenance campus. The Goodrich Singapore Campus was officially opened FUEL ACCESSORY SERVICE during the Singapore Airshow on 20 February 2008. TECHNOLOGIES PTE LTD SIA Engineering Company: 49% INTERNATIONAL AEROSPACE TUBES – Hamilton Sundstrand (United Technologies Group): 51% ASIA PTE LTD SIA Engineering Company: 33.33% Fuel Accessory Service Technologies Pte Ltd (FAST) Pratt & Whitney (United Technologies Group): 66.67% was set up to provide the best quality jet fuel control and engine accessory repair services to airlines and International Aerospace Tubes - Asia Pte Ltd other customers in the Asia-Pacific region. FAST’s (IAT-Asia) was incorporated in 2002 and specialises state-of-the-art facility offers complete repair, in the repair of aircraft and engine tubes, ducts and overhaul and modification capabilities for a wide manifolds for customers in the Asia-Pacific region. range of Hamilton Sundstrand and other OEM fuel IAT-Asia has approvals from Civil Aviation Authority components installed on large commercial engines of Singapore, Federal Aviation Administration, and auxiliary power units. European Aviation Safety Agency, General For the year 2007, FAST was presented with Administration of Civil Aviation of China and two awards – More than 5 years without a safety Department of Civil Aviation Malaysia for the repair incident and the Best Quality Clinics among of aircraft metal conduits. The range of repair the Hamilton Sundstrand’s facilities worldwide. capabilities include various modular tubes on the PW4000-94”/100”/112”, JT9D-7R4 and V2500-A1/ GOODRICH AEROSTRUCTURES SERVICE A5/D5, engine diffuser case, intermediate case and CENTER – ASIA PTE LTD turbine exhaust case, as well as tubes from other SIA Engineering Company: 40% OEMs, such as Boeing, Goodrich and Rolls-Royce. Goodrich Aerostructures Group: 60% IAT-Asia is also working aggressively on the tube Goodrich Aerostructures Service Center - Asia Pte repair capabilities for CFM56, CF6 and Trent engines Ltd (GASCA) specialises in the maintenance, repair to meet the rising demand. IAT-Asia maintains a and overhaul of both nacelle system components strong focus on improving its capabilities and other and airframe composite components for airlines in key processes through its Achieving Competitive the Asia-Pacific region. Excellence (ACE) programme, and has been GASCA is accredited to the Boeing Network awarded with ACE Gold status on 15 March 2007 Service Centre and more significantly, it was the under the Pratt & Whitney new ACE criteria. first non-Boeing facility to receive such recognition. IAT-Asia has also received many other industry It has repair support agreement with Aircelle to awards and recognitions, including the following: service the A340-500/600 nacelle system, which Finance Award (2005) from Global Repair Services could be expanded to include the Airbus A380 for the unit with the most improved Return on Sales aircraft. GASCA secured a contract to design and from 2004-2005; Global Service Engineering Award build prototype fan cowls in support of the Pratt (2006) for its outstanding effort in implementing the & Whitney Geared Turbofan flight test programme 2005 Global Services Partners Repair Development for the Next Generation Single Aisle aircraft Growth Plan; GSP Global Quality (2006) Award for development, which is a replacement for the being the Most Improved Escape Monthly Average Boeing B737 and Airbus A320 family of aircraft.

48 Reduction by Repair Centre (“Escape” refers to arrangement layout; preliminary structural and the case when customers returned the products electrical analysis; supplier management for during the warranty period). In 2007, IAT-Asia was technical integration; supply of aircraft modification presented with Silver award from Singapore Ministry kits and materials; and on-site engineering and of Manpower for Workplace Safety & Health. certification liaison support.

INTERNATIONAL ENGINE COMPONENT JADE was awarded the first Supplemental Type OVERHAUL PTE LTD Certificate by the Federal Aviation Administration SIA Engineering Company: 50% under the Singapore-United States Bilateral Aviation Rolls-Royce: 50% Safety Agreement on 14 February 2008.

Formed in 1997 and commenced operations in 1998 MESSIER SERVICES ASIA PTE LTD with an investment of more than US$15 million, SIA Engineering Company: 40% International Engine Component Overhaul Pte Ltd Messier Services Pte Ltd (a subsidiary (IECO) is located at the heart of Singapore’s Aviation of SAFRAN): 60% Park in Loyang, right on the doorstep of Singapore’s Messier Services Asia Pte Ltd (MSA) operates one Changi Airport. IECO’s core business is in the repair of the most comprehensive landing gear repair and and overhaul of Rolls-Royce Trent and RB211 overhaul facilities in the world. It is also the largest in Nozzle Guide Vanes and Compressor Stators, using the Asia-Pacific. MSA houses a Landing Gear Service state-of-the-art technology, combined with a well- Centre that has repair and overhaul capabilities for a trained and highly motivated workforce. wide range of Boeing and Airbus airliners, as well as IECO currently has a worldwide customer base many regional and commuter aircraft. It also owns that encompasses the Asia-Pacific region, such as a Component and Accessory Service Centre that Singapore, Hong Kong, Australia, China and the provides component overhaul services to support a rest of the world that includes the United Kingdom, wide range of commercial aircraft. USA and Europe. IECO is a Rolls-Royce certified With sophisticated engineering workshops, state- Gold Centre of Excellence for the repair of Rolls- of-the-art technology, highly-skilled technical Royce aero engine components. IECO was the personnel, an experienced management team and a British Business Award Winner in the Science and dedication to total quality, MSA has obtained official Technology Category in 2006. endorsements from a large number of national and JAMCO AERO DESIGN & ENGINEERING PTE LTD international airworthiness authorities. SIA Engineering Company: 45% MSA has been appointed by Boeing as their Service Jamco America: 50% Centre for the overhaul of Boeing landing gears Jamco Corporation: 5% and associated components. It has signed a long- Jamco Aero Design & Engineering Pte Ltd (JADE) term spares and technical support agreement with is the second joint venture between SIA Engineering Boeing to better serve its airline customers. Company and Jamco Corporation. JADE provides SINGAPORE AERO ENGINE SERVICES PTE LTD total solutions for aircraft interior modifications, SIA Engineering Company: 50% and is one of the first in the region to offer airline Rolls-Royce: 30% customers with a one-stop service centre for cabin Hong Kong Aero Engine Services Ltd (HAESL): 20% modifications, from initial conceptual design and certification, right through to installation. Singapore Aero Engine Services Pte Ltd (SAESL) is a $185 million joint venture between Rolls-Royce, JADE also works on getting regulatory design Hong Kong Aero Engines Services Limited and SIA approvals and technical solutions for product Engineering Company. The modern 18,500 square improvements; development of technical metre air-conditioned engine overhaul facility is specifications; equipment selection; interior

49 located along Calshot Road, adjacent to Changi building is underway and when completed in 2009, Airport. The facility, designed to handle up to 200 will enhance SAESL’s service offerings, build on the Rolls-Royce Trent engines a year, undertakes engine company’s position as a Trent Centre of Excellence repair and overhaul for Singapore Airlines, Malaysia and handle an additional 50 Trent engines a year. Airlines, Thai Airways, Virgin Atlantic, Emirates With SAESL’s customers operating over 450 Trent and Garuda. It also provides offload capacity for engines, and taking delivery of more than 100 other Rolls-Royce Trent engine overhaul facilities additional Trents in the next three years, SAESL worldwide. With the popularity of the Trent engines has developed a wide market base and established among the world’s airlines, SAESL’s business has itself as a facility which is able to deliver reliable and grown rapidly. efficient repair and overhaul of Trent engines. SAESL started operations in 2001 and now employs SINGAPORE JAMCO PTE LTD over 700 personnel, with over 85 per cent from SIA Engineering Company: 65% Singapore. Through an innovative state-of-the- JAMCO Corporation: 30% art in-line gantry system, the facility is capable Itochu Singapore: 5% of handling module change and module overhaul work of Trent 800 (B777) engines, Trent 700 (A330) Singapore JAMCO Pte Ltd, with its facility located in engines, Trent 500 (A340) engines, and has recently the Loyang Aviation Hub, specialises in the design, added capability for the new Trent 900 engines, manufacture, maintenance and repair of aircraft which entered into service with Singapore Airline’s galleys and monuments. The Company’s products A380 in late 2007. In addition to engine capability, range from meal carts and service trolleys to closets SAESL has developed component repair capability and galleys complexes. since 2002, including cells for compressor and fan Maintenance services offered at the Loyang blades in 2005. The Compressor Blade Cell is a facility include the overhaul of cabin monuments $10 million investment with semi-automated process (galleys/lavatories), high quality seat upholstery flow and the capability to tip weld compressor refurbishment work, galley inserts, carpets and blades for all Trent engine variants. Facility insulation blankets fabrication and repair for expansion for a two-storey, 12,000 square metre commercial and business jets.

50 Being a comprehensive cabin interior service TCS products but also support products from TOS provider, the Company also provides cabin and and other Pratt & Whitney repair units. Apart from line maintenance services at Changi Airport and the coating technologies, it also utilises state-of- is capable of supporting overseas maintenance the-art repair techniques in welding, machining, programmes at short notice. brazing and heat treatment. Besides being an Airbus-approved supplier for Over the years, TCS has gained a reputation for galleys and monuments, Singapore JAMCO is delivering uncompromising quality and world-class AS9100 certified and holds CAAS SAR Part 145 turnaround time. This has been achieved through a Repair Approval, SAR Part 21 POA, SAR Part 21 culture of continuous improvement in business and DOA, EASA Part 145 Repair Approval, EASA shop floor processes. Part 21 POA and Malaysian DCA Repair and TCS currently has a worldwide customer base Production Approvals. that encompasses airlines as well as independent Turbine Coating Services Pte Ltd engine overhaul shops from Asia-Pacific, Europe SIA Engineering Company: 24.5% and the Americas. Pratt & Whitney (United Technologies Group): 51% Singapore Technologies Aerospace: 24.5% overseas Ventures Turbine Coating Services Pte Ltd (TCS) was Aircraft Maintenance Services established in 2000 to repair PW4000 High Pressure Australia PTY LTD Turbine Blades. It has since added International SIA Engineering Company: 100% Aero Engines (IAE) V2500 Turbine Blades to its capability list. TCS is co-located at Turbine Overhaul Established in 1992 and fully acquired by SIA Services (TOS) and shares the same well-trained Engineering Company in 2007, Aircraft Maintenance and dedicated workforce. Services Australia Pty Ltd (AMSA) provides highly skilled and trained aircraft maintenance With the setting up of TCS, the joint venture brought engineers to undertake the mandatory engineering in key coating technologies to Singapore, including requirements for airlines operating in and out of, Electron Beam Physical Vapour Deposition, and within Australia. AMSA currently operates out Cathodic Arc and Cubic Boron Nitride coating. of its main office in Brisbane International Airport These coating technologies not only support the 51 with line stations at major Australian airports, In 2007, ACTS received the Voluntary Protection including Sydney, Melbourne, Adelaide, Perth Programme and Taiwan Training Quality System and Coolangatta. The company provides line awards from the Taiwan Government Council of maintenance services for the Boeing B737, B747, Labour Affairs and the Energy Conservation award B777, B767, Airbus A310, A320, A330, A340, from the Taiwan Government Energy Bureau. A380, Fokker 100 and F28. AVIATION PARTNERSHIP ASIAN COMPRESSOR TECHNOLOGY (PHILIPPINES) CORPORATION SERVICES CO. LTD SIA Engineering Company: 51% SIA Engineering Company: 24.5% Cebu Pacific Air: 49% Pratt & Whitney (United Technologies Company): 51% Aviation Partnership (Philippines) Corporation is China Airlines: 24.5% SIA Engineering Company’s third line maintenance Asian Compressor Technology Services Co. Ltd joint venture outside Singapore. The joint venture (ACTS) specialises in the overhaul and repair of provides line maintenance, light aircraft checks High Pressure Compressor and Low Pressure and technical ramp handling for Cebu Pacific Air, Compressor components for the PW4000, Singapore Airlines, SilkAir and third-party airline PW2000/ F117 and CF6 families of engines. customers at three major international airports Components that ACTS repairs include stators, – Manila, Cebu and Davao – as well as up to 17 variable vane inner shrouds, outer air seals domestic airports in the Philippines. They also and honeycomb shroud guides. provide flight mechanics on regional flights of Cebu Pacific Air to 12 Asian destinations. ACTS is certified as a United Technologies Corporation (UTC) Achieving Competitive Excellence HONG KONG AERO ENGINE SERVICES LTD (ACE) Gold Site – the highest level achievable in SIA Engineering Company: 10% UTC’s ACE operating system. As of February 2008, Hong Kong Aero Engine Company (HAECO): 45% the company successfully completed 52 months Rolls-Royce: 45% without Lost Time or Recordable injury and 44 Hong Kong Aero Engine Services Ltd (HAESL) months of 99% or better on-time delivery. is an engine repair and overhaul facility equipped Established in 1995 and employing more than 110 with full capabilities in the repair and overhaul people, ACTS differentiates itself in the marketplace of Rolls-Royce Trent and RB211 series engines. through its consistent delivery performance, prompt Located in Tseung Kwan O Industrial Estate in customer service, dependable quality and overall Hong Kong, this joint venture leverages on ease of doing business. While its customer base is Rolls-Royce’s strength as an OEM and HAECO’s currently concentrated in Asia and North America, more than 20 years of expertise on Rolls-Royce ACTS has recently started winning work from engines to offer high quality and comprehensive customers in Western Europe. services to customers. ACTS received ISO 9002 certification in 1998 HAESL possesses significant component repair and became an ISO14000 certified shop at the capability for both in-house and third-party work, end of 2003. Air Agency Certifications acquired and currently operates four gold accredited include authorisations from the Federal Aviation component repair cells under the Rolls-Royce Administration, European Aviation Safety Agency, Centre of Excellence Programme. In December Civil Aeronautics Administration, Taiwan, General 2007, HAESL opened a new 3,000 square metre Administration of Civil Aviation of China, Civil module repair workshop within the facility. It Aviation Authority of Singapore and Department also plans to expand the facility further with a of Civil Aviation Malaysia. new component repair building scheduled to be operational in early 2010.

52 PAN ASIA PACIFIC AVIATION SERVICES LTD The company has also captured business from SIA Engineering Company: 47.06% new airlines flying into Indonesia, namely China Malaysia Airlines: 23.53% Eastern Airlines, OZ Jet Airlines, TransAsia Airways. PT Garuda Indonesia: 17.65% PT JAE also secured the contract from Jett8 Cargo Royal Brunei Airlines: 11.76% and Hong Kong Express. On the domestic front, Pan Asia Pacific Aviation Services Ltd (PAPAS) the company has secured Power-By-Hour line has been our line maintenance joint venture based maintenance contract with Mandala Airlines for in Hong Kong since 1998. With accreditation their Airbus A319/320 fleet and technical ramp from major airworthiness authorities, including handling for Megantara. Civil Aviation Authority of Singapore, European PT JAE has expanded its services beyond normal Aviation Safety Agency and the Civil Aviation line maintenance activities to include 500-hour Department of Hong Kong, PAPAS offers a full maintenance checks A & B, Interior & Exterior suite of line maintenance services in Hong Kong. Aircraft Cleaning and Residual Disinsection. PAPAS’ services include aircraft certification, defect rectification, technical ramp handling, aircraft PWA INTERNATIONAL LTD interior cleaning, as well as aircraft monthly checks. SIA Engineering Company: 49% Pratt & Whitney (United Technologies Group): 51% PAPAS continues to provide high quality service to existing customers, source for new potential PWA International Ltd (PWAI) specialises in the customers and explore new opportunities to overhaul and repair of large commercial jet engine enhance its service offerings both within and cases. Based in Dublin, PWAI is committed outside Hong Kong. to provide its customers with customised and dependable solutions. It strives to offer the highest PT JAS AERO–ENGINEERING SERVICES levels of quality, with competitive turnaround times (PT JAE) and pricing through a combination of continuous SIA Engineering Company: 49% improvement and value-added approach, modern PT Jasa Angkasa Semesta: 51% technology and a highly motivated workforce. PWAI Having commenced operations in 2003, PT JAS takes pride in its ability to offer unique repairs for Aero-Engineering Services (PT JAE) provides aircraft PW2000, PW4000 and V2500 engine cases. line maintenance release certification, technical ramp SIA ENGINEERING (PHILIPPINES) CORPORATION handling services and ground support equipment at SIA Engineering Company: 65% 10 major Indonesian airports, including Cengkareng Cebu Pacific Air: 35% (Jakarta), Surabaya, Denpasar (Bali) and Medan. PT JAE is the SIA Engineering Company’s second SIA Engineering (Philippines) Corporation, a joint joint venture to offer line maintenance services venture formed in April 2008, will provide maintenance, outside Singapore and has a combined clientele repair and overhaul (MRO) services for narrow and of more than 29 international airlines and cargo wide-body aircraft. It plans to construct three hangars operators, including SIA, SilkAir, EVA Air, Royal over the next three years to provide heavy and light Brunei Airlines, Thai Airways, Valuair, Lufthansa, maintenance checks to international airlines. The Qatar Airways, Emirates, Kuwait Airways, FedEx, initial investment capital for the construction of the Cathay Pacific, Saudia, Yemenia and Qantas. three hangars, purchase of tools and equipment, and working capital is estimated to be $81 million. The company has enhanced its certification recognition by obtaining the 145 approvals from This is the latest joint venture in SIAEC’s stable of 21 EASA and 145 Repair Station Approvals from joint ventures, which spreads across seven countries. Federal Aviation Regulations.

53 corporate governance

SIA Engineering Company Limited considers good Directors attend a full-day annual strategy meeting to corporate governance to be the hallmark of a well- discuss and prioritise the Company’s strategic growth managed organisation. The focus of the Company’s initiatives over a 5-year period. Proposals considered governance framework is to promote accountability, at the strategy meeting are further developed and transparency and corporate fairness. In substance, discussed at subsequent Board Meetings with it goes beyond mere compliance with form. The Management’s inputs. At the strategy meeting essence of the framework is manifested in the held on 14 September 2007, Directors encouraged composition of the Board and Board Committees, Management to, inter alia, venture further into Asia division of powers and duties, adoption of checks Pacific to take advantage of emerging markets and the and balances and instilling the right corporate competitive cost environment. Our recent entry into culture across the organisation. The Board and Australia with the acquisition of Aviation Maintenance Management are committed to achieving sustained Services Australia and the partnership with Cebu value creation for the benefit of shareholders Pacific Air to set up our second heavy maintenance by adhering to a set of well-defined corporate base at Clark International Airport culminate from the governance principles and maintaining effective directions set at these annual meetings. structures and processes. All of these reflect the The contributions of the Directors are especially principles and spirit of the Code of Corporate visible in the Company’s four Board Committees, Governance 2005 (the “Code”). the composition of which is regularly reviewed to THE ROLE OF THE BOARD AND CONDUCT avail of the core competencies of existing and newly OF ITS AFFAIRS (Principle 1) appointed Directors. These are the Audit Committee, Compensation and HR Committee, Nominating The Board oversees the business affairs of the Committee and Board Committee. At all times, the Company, providing entrepreneurial stewardship to Board and Board Committees have independent Management and conferring with them regularly. It access to the Chief Executive Officer, other members evaluates and sets the direction of the Company’s of Senior Management and the Company Secretary, strategic initiatives and performance objectives as well as independent specialist advisors, if the need and targets. There is an objective decision-making arises. There is a clear demarcation of responsibilities process, which allows each Director to engage between the Board and Management. in constructive debate and exercise independent judgement. In accordance with the Company’s Orientation and Training for Directors Articles of Association, approval of proposals tabled The Company’s Directors have served on the for Board decision is by majority vote. The Board has Boards of other companies, including in many adopted guidelines on matters requiring its approval, cases, listed companies. which include all matters of strategic importance, corporate governance practices, legal and regulatory Newly appointed Directors undergo a half-day compliances, risk management, financial performance orientation session, which includes presentations by and annual budgets, key operational initiatives, Management to familiarise them on the Company investment proposals and major transactions. and the Group’s businesses, operations, processes and strategic directions. Directors are also given a The Board meets at least four times a year to review tour of key facilities. From time to time, Directors and approve, inter alia, the quarterly financial results are addressed by specialist consultants on of the Company, including the mid-year and year-end industry-related trends and developments, and are results. Detailed papers are submitted to the Board kept updated on relevant new laws, regulations in a timely manner, providing information on the and changing commercial risks. This is done in background and justifications for each proposal furtherance of their training. or mandate sought, including, where applicable, forecasts and projections. Between Board meetings, The composition of the Board and Board Committees, matters for information or approval are dealt with and attendance at meetings held in the year under by circulation. Additionally, Chairman and the review are as shown on the next page: Independent Directors meet twice a year in the absence of Management. 54 Main Board Audit Committee Nominating Compensation & Board Committee Committee HR Committee

Name Status Position Att. Position Att. Position Att. Position Att. Position Att.

Stephen Lee Ching Yen Non- Chairman 5/5 (last re-appointed 21 Jul 2006 Independent first appointed on 1 Dec 2005) Chew Choon Seng Non- Dy 5/5 Member 2/2 Member 6/6 Member – (last re-appointed on 25 Jul 2005, Independent Chairman first appointed on 22 May 2003) Bey Soo Khiang Non- Member 5/5 Member – (last re-appointed on 21 Jul 2006, Independent first appointed on 1 Mar 2000) Tan Bian Ee Independent Member 5/5 Member 4/4 Chairman 2/2 (last re-appointed on 20 Jul 2007, (elected on first appointed on 15 Apr 2004) 22 Oct 2007)

Koh Kheng Siong Independent Member 5/5 Chairman 4/4 Member 6/6 (last re-appointed 21 Jul 2006, first appointed on 1 Sep 2005) Paul Chan Kwai Wah Independent Member 4/5 Chairman - Chairman 3/3 Alternate – (last re-appointed on 20 Jul 2007, (stepped down (appointed as (appointed on first appointed on 1 Aug 2006) on 21 Oct 2007) member on 20 Jul 2007) 20 Jul 2007 & elected as Chairman on 5 Nov 2007) Andrew Lim Ming-Hui Independent Member 5/5 Member 2/2 (last re-appointed on 20 Jul 2007, (appointed on first appointed on 1 Aug 2006) 20 Jul 2007) Ron Foo Siang Guan Independent Member 2/3 Member 2/2 (first appointed on 1 Aug 2007 ) (appointed on 15 Aug 2007)

Lim Joo Boon Independent Member 2/3 Member 2/3 (first appointed on 1 Aug 2007) (appointed on 15 Aug 2007)

Oo Soon Hee Independent Member 3/3 Member 1/2 Member 2/2 (first appointed on 1 Aug 2007) (appointed on (appointed on 15 Aug 2007) 15 Aug 2007)

Wong Nang Jang Independent Member 1/1 Member - (retired on 20 Jul 2007, (retired on last re-appointed on 26 Jul 2004, 20 Jul 2007) first appointed on 24 Mar 2000) N Varaprasad Independent Member 1/1 Member 2/2 Chairman 3/3 (retired on 20 Jul 2007, (retired on (retired on last re-appointed on 25 Jul 2005, 20 Jul 2007) 20 Jul 2007) first appointed on 1 Mar 2000) Thio Su Mien Independent Member 1/1 Member 2/2 Alternate – (retired on 20 Jul 2007, (retired on (retired on last re-appointed on 21 Jul 2006, 20 Jul 2007) 20 Jul 2007) first appointed on 1 Mar 2000) Total Number of Meetings Held in FY07/08 5 4 2 6 –

Note: “Att.” refers to the number of Board Meetings, Annual Strategy Meeting & Board Committee Meetings attended by Directors in FY2007/08.

55 BOARD COMPOSITION, BALANCE Management is accountable to the Board. The Chief Main Board Audit Committee Nominating Compensation & Board Committee Committee HR Committee AND MEMBERSHIP (Principles 2, 3 & 4) Executive Officer is responsible for the day-to-day operations of the Company and is not a Board Name Status Position Att. Position Att. Position Att. Position Att. Position Att. Reviewing Board composition and recommending member. He chairs the Management Committee, appointment of new Directors are within the Stephen Lee Ching Yen Non- Chairman 5/5 comprising senior executives of the Company. (last re-appointed 21 Jul 2006 Independent purview of the Nominating Committee. Relying on The Management Committee meets weekly to first appointed on 1 Dec 2005) a set of stringent criteria approved by the Board, discuss both policy and operational issues, and Directors are carefully selected to augment core Chew Choon Seng Non- Dy 5/5 Member 2/2 Member 6/6 Member – to implement key decisions made by the Board. (last re-appointed on 25 Jul 2005, Independent Chairman competencies of existing Directors to ensure The Chief Executive Officer also chairs the Senior first appointed on 22 May 2003) consistent overall effectiveness of the Board. Management Committee (“SMC”), members of Bey Soo Khiang Non- Member 5/5 Member – The Board has the requisite blend of expertise, which include the Senior Vice Presidents. The SMC (last re-appointed on 21 Jul 2006, Independent skills and attributes necessary to oversee the decides on specific routine matters delegated by first appointed on 1 Mar 2000) Company’s growing businesses. Collectively, the Board. Tan Bian Ee Independent Member 5/5 Member 4/4 Chairman 2/2 they have competencies in areas such as airline (last re-appointed on 20 Jul 2007, (elected on operations, accounting, finance, law, information BOARD PERFORMANCE (Principle 5) first appointed on 15 Apr 2004) 22 Oct 2007) technology, logistics management and human The Board has implemented a process for assessing Koh Kheng Siong Independent Member 5/5 Chairman 4/4 Member 6/6 resource development, and working experience in (last re-appointed 21 Jul 2006, the effectiveness of the Board as a whole and key markets. Details of the Directors’ professional first appointed on 1 Sep 2005) the contributions of individual Directors. The qualifications and background can be found on Paul Chan Kwai Wah Independent Member 4/5 Chairman - Chairman 3/3 Alternate – process, managed by a leading firm of human pages 13-18. (last re-appointed on 20 Jul 2007, (stepped down (appointed as (appointed on resource consultants for impartiality, comprises first appointed on 1 Aug 2006) on 21 Oct 2007) member on 20 Jul 2007) At the time of this report, the Board consists of an assessment of both qualitative and quantitative 20 Jul 2007 ten non-executive Directors, seven of whom are criteria. The qualitative assessment is structured & elected as Chairman on independent. This high representation of independent to measure the overall performance of the Board 5 Nov 2007) Directors denotes a strong independent element on and the Board Committees; there is also a peer Andrew Lim Ming-Hui Independent Member 5/5 Member 2/2 the Board. The remaining three Directors, who are evaluation of individual Directors’ contributions. (last re-appointed on 20 Jul 2007, (appointed on non-independent by virtue of the high office they hold The quantitative assessment measures the Board’s first appointed on 1 Aug 2006) 20 Jul 2007) in Singapore Airlines, bring to the Company a wealth performance against key financial indicators. Ron Foo Siang Guan Independent Member 2/3 Member 2/2 of aviation industry background. (first appointed on 1 Aug 2007 ) (appointed on This is the sixth year of implementation of the 15 Aug 2007) As a principle of good corporate governance, all Board performance evaluation using a confidential

Lim Joo Boon Independent Member 2/3 Member 2/3 Directors are subject to retirement and re-election at questionnaire completed by each Director and (first appointed on 1 Aug 2007) (appointed on least once every 3 years. Annually, the Nominating submitted to the external consultants directly. The 15 Aug 2007) Committee determines the independence of results of the evaluation are used to identify areas Oo Soon Hee Independent Member 3/3 Member 1/2 Member 2/2 Directors according to the criteria stipulated in the for improvement in the discharge of the Board’s (first appointed on 1 Aug 2007) (appointed on (appointed on Code based on individual declarations. Details of duties. Quantitative performance is measured 15 Aug 2007) 15 Aug 2007) the tasks performed by the Nominating Committee against the Company’s share price performance Wong Nang Jang Independent Member 1/1 Member - in FY2007/08 are set out on page 62 and 63. over a five-year period vis-à-vis the Singapore (retired on 20 Jul 2007, (retired on Straits Times Index, return on equity and economic last re-appointed on 26 Jul 2004, 20 Jul 2007) Overall, there is a clear demarcation of the roles value-add. first appointed on 24 Mar 2000) and responsibilities of the Chairman and the Chief N Varaprasad Independent Member 1/1 Member 2/2 Chairman 3/3 Executive Officer, consistent with the principle This annual process is the principal means by which (retired on 20 Jul 2007, (retired on (retired on of instituting an appropriate balance of power the Nominating Committee and the Board take last re-appointed on 25 Jul 2005, 20 Jul 2007) 20 Jul 2007) and authority. The Chairman leads the Board to stock, monitor performance and make continuous first appointed on 1 Mar 2000) ensure its overall effectiveness and encourages improvements to the effectiveness of the Board. Thio Su Mien Independent Member 1/1 Member 2/2 Alternate – constructive relations between Directors as well as (retired on 20 Jul 2007, (retired on (retired on last re-appointed on 21 Jul 2006, 20 Jul 2007) 20 Jul 2007) the Board and Management. At Board Meetings, first appointed on 1 Mar 2000) he facilitates participation of the Directors present. Total Number of Meetings Held in FY07/08 5 4 2 6 – Together with the Directors, the Chairman promotes high standards of corporate governance. Note: “Att.” refers to the number of Board Meetings, Annual Strategy Meeting & Board Committee Meetings attended by Directors in FY2007/08.

56 ACCOUNTABILITY AND ACCESS TO Chairman Koh Kheng Siong INFORMATION (Principles 6 & 10) Members Tan Bian Ee Andrew Lim Ming-Hui The Company prepares its financial statements (appointed on 20 July 2007) in accordance with the Singapore Financial Ron Foo Siang Guan Reporting Standards, as prescribed by the Council (appointed on 15 August 2007) on Corporate Disclosure and Governance under Oo Soon Hee the Companies Act. Management accounts are (appointed on 15 August 2007) prepared to present a balanced assessment of N Varaprasad the Company’s performance, financial position (retired on 20 July 2007) and prospects, and are submitted to the Board on Thio Su Mien a monthly basis. Information papers on material (retired on 20 July 2007) developments or issues being dealt with by Management are also submitted to the Board. The Committee met four times during the year with Management and the internal and external auditors Directors are provided with papers well in advance of the Company. The attendance of individual of Board and Board Committee meetings or Directors at these meetings is shown on page 55. deadlines for decisions, to enable them to make In the course of the year, the Committee performed well-considered and informed decisions. Board the following in accordance with the duties and procedures also enable Directors, either individually responsibilities under its Charter:- or as a group, to seek independent professional advice at the Company’s expense, if necessary, in a) reviewed the audit plans of the internal and furtherance of their duties. external auditors of the Company, the results of the auditors’ examination of the Company’s The Board has defined the role of the Company material internal financial, accounting and Secretary to, inter alia, include: compliance controls and the co-operation given a) supervising, monitoring and advising by the Company’s officers to the auditors; on compliance by the Company with its b) reviewed the Company’s risk management Memorandum and Articles of Association, laws framework and processes and provided and regulations applicable in Singapore, and oversight to the work of the Risk Management the Listing Manual of the Singapore Exchange Committee in respect of financial risks; Securities Trading Ltd (“SGX-ST”); c) reviewed the significant financial reporting b) ensuring an open and regular flow of issues and judgements so as to ensure the communication between the Company and integrity of the financial statements; the SGX-ST, the Accounting & Corporate Regulatory Authority, and both institutional d) reviewed the quarterly and full-year and individual shareholders; and announcements of results and annual financial statements and the external auditor’s report c) updating and informing the Board on thereon before their submission to the Board the principles and best practices of of Directors; corporate governance. e) reviewed the independence of the external AUDIT COMMITTEE AND INTERNAL CONTROLS auditor and the nature and extent of non-audit (Principles 11 & 12) services provided by them; The Audit Committee comprises non-executive f) considered and endorsed for Board approval Directors, all of whom are independent. The the re-appointment of the external auditor members of the Audit Committee for the year and their audit fee; under review were: g) reviewed the adequacy and effectiveness

of the internal audit function;

h) reviewed interested person transactions; 57 i) reviewed the findings of investigations into and containment of financial risk. The Board notes complaints made pursuant to the whistle-blowing that no system of internal control can provide process established by the Company; and absolute assurance against the occurrence of material errors, poor judgement in decision-making, j) reviewed the appropriateness of banking facilities. human error, losses, fraud or other irregularities. The Committee has full access to and the co-operation COMPENSATION AND HR COMMITTEE (Principle 7) of Management. The Committee has full discretion to invite any Director to attend its meetings, at which The Compensation and HR Committee comprises the Chief Executive Officer, Chief Financial Officer four non-executive Directors, three of whom and Company Secretary are also present. The (including the Chairman) are independent. The Committee has access to the Company’s resources, members of the Committee for FY2007/08 were: including independent external specialist advisors, Chairman N Varaprasad to discharge its functions. (retired on 20 July 2007) During the year, the Committee also met with Paul Chan Kwai Wah the internal and external auditors in the absence (appointed on 20 July 2007) of Management. Members Chew Choon Seng The Audit Committee has undertaken a review of Koh Kheng Siong the fees paid to the external auditors, including fees Lim Joo Boon paid for non-audit services during the year and is of (appointed on 15 August 2007) the opinion that the auditor’s independence has not The Committee, guided by the principles of been compromised. the Code, regularly reviews the recruitment, Minutes of the Committee’s meetings are circulated appointment, development and compensation of to Directors. senior staff with reference to market data provided by recognised surveys of comparative groups in The review of the adequacy of operational controls the aerospace and general sectors. The Committee and risk management policies is undertaken directly also reviews and recommends the fees payable by the Board, and accordingly, these functions do to Directors serving on the Board and Board not come under the purview of the Audit Committee. Committees. The Committee is also responsible for (Please refer to the report on Risk Management on reviewing the eligibility, guidelines, allotment and page 63.) awards of the Company’s Employee Share Option The Directors are of the opinion that the Company Plan (“ESOP”), Restricted Share Plan (“RSP”) and complies with the Code on Audit Committees. Performance Share Plan (“PSP”). The various divisions within the Company have During FY2007/08, the Committee held six meetings developed a Control Self Assessment programme, and undertook, inter alia, the following: where annually, the operating departments’ a) reviewed and decided the allotment for the 9th Management reviews and reports on the adequacy ESOP Grant; of their respective units’ control environment. b) determined the eligibility and guidelines of the The Board believes that, in the absence of evidence 9th ESOP Grant; to the contrary, the system of internal control maintained by the Company’s Management, and c) conducted the annual salary review and that was in place throughout the financial year and promotion exercise of senior staff; up to the date of this report provides reasonable, d) approved the Profit Sharing Bonus Formula for but not absolute, assurance against material managerial staff; financial misstatements or loss, and include the safeguarding of assets, the maintenance of proper e) conducted a review of the RSP and PSP, i.e. the accounting records, the reliability of financial actual performance of KPIs versus performance information, compliance with appropriate legislation, targets set for the award of shares; regulation and best practices, and the identification 58 f) determined the allotment for the RSP and PSP Note: for FY2007/08; Subject to Shareholders’ approval of the fees payable for FY07/08, every Director will be entitled to receive the Basic Fee as shown in the g) reviewed and approved the total compensation table above for FY07/08. In addition, allowances are payable to the Chairman and Deputy Chairman of the Board, as well as the Chairman framework for managerial staff, including the and Members of the relevant Board Committees. If a Director occupied implementation of market-based salary ranges a position for part of FY07/08, the fee or allowance payable to him/her will be pro-rated accordingly. An Attendance Fee of $1,000 is payable and increment quantums; for each Board meeting and the Annual Strategy meeting.

h) reviewed and endorsed the Succession Computed on the basis of the foregoing scale, the Development Framework for the Company; fee proposed for each Director for FY2007/08 is as i) reviewed the remuneration payable to shown in the table below: Company Directors for FY2007/08; Name of Director Fee ($) j) reviewed and approved the Individual Stephen Lee Ching Yen 90,000 Scorecards of senior management; and Chew Choon Seng3 110,000 k) reviewed and approved in-principle a N Varaprasad1, 4 26,779 Performance Cash Plan as an alternative for Wong Nang Jang1 17,680 ESOP from FY2009/10 for non-managerial staff. Bey Soo Khiang3 60,000 REMUNERATION REPORT (Principles 8 & 9) Thio Su Mien1 20,713 The fee for Directors reflects the scope and Tan Bian Ee 84,426 extent of a Director’s increasing responsibilities Koh Kheng Siong 90,000 and obligations. It is measured against relevant Paul Chan Kwai Wah 71,186 benchmarks and is competitive. The Board believes Andrew Lim Ming-Hui 63,989 that it is imperative to remunerate Directors Ron Foo Siang Guan2 44,568 equitably to attract and retain individuals with the Lim Joo Boon2 38,284 necessary capabilities and desired attributes to Oo Soon Hee2 51,852 serve on the Board. TOTAL 769,477 The proposed Directors’ remuneration for FY2007/08,

comprising fees and allowances, amounts to $769,477 1 N Varaparasad, Wong Nang Jang and Thio Su Mien retired as ($741,068 in FY2006/07) and is derived using the Directors at the close of the AGM on 20 July 2007. same rates as FY2006/07, which are as follows: 2 Ron Foo Siang Guan, Lim Joo Boon and Oo Soon Hee were appointed as Directors with effect from 1 August 2007. 3 Fees due to Chew Choon Seng and Bey Soo Khiang are paid to, TYPE OF APPOINTMENT Scale of and retained by, Singapore Airlines Ltd. Directors’ Fees 4 Fees due to N Varaprasad is paid to the Directorship & Consultancy Board of Directors S$ Appointments Council. Member’s Fee (“Basic Fee”) 45,000 Other than the foregoing, no other remuneration is Chairman’s Allowance 40,000 paid to Directors. Deputy Chairman’s Allowance 30,000 None of the immediate family members of a Director Board Meeting Attendance Fee 1,000 or of the CEO was employed by the Company and Board Committee its related companies in a managerial position for Member’s Allowance 10,000 the period 1 April 2007 to 31 March 2008. Audit Committee Member’s Allowance 20,000 Chairman’s Allowance 30,000 Other Board Committees Member’s Allowance 10,000 Chairman’s Allowance 20,000 59 Key Executives’ Remuneration The Company’s key executives’ remuneration structure is designed to include long-term incentives, which allows the Company to align executive compensation with the market. The key executives’ remuneration structure includes the components of variable bonus, awards of employee share options under the Senior Executive Share Option Scheme, and share awards under the SIAEC Restricted Share Plan (“SIAEC RSP”) and/or the SIAEC Performance Share Plan (“SIAEC PSP”), in addition to a fixed basic salary and fixed allowances. The payment of variable bonuses and grants of share option and share awards are dependent on the achievement of prescribed performance measures, such as the Company’s financial performance as well as the executives’ individual performance. The remuneration of the Company’s top six executives in FY2007/08 was as follows:

Remuneration Bands Salary Bonus Benefits Total Stock options granted Awards Awards & Top 6 Executives (%) (%) (%) during the year under under (on 2 July 2007) SIAEC RSP SIAEC PSP

Fixed Variable# Number Exercise Number Number (%) (%) of Shares Price ($) of Shares* of Shares* $750,001 – $1,000,000

William Tan 50% 4% 37% 9% 100% 68,400 4.67 17,100 22,800 Chief Executive Officer

$250,001 – $500,000 Chan Seng Yong 62% 6% 28% 4% 100% 28,700 4.67 10,700 9,600 Senior Vice President (Services) Png Kim Chiang 62% 6% 27% 5% 100% 28,700 4.67 10,700 9,600 Senior Vice President (Commercial) Jack Koh Swee Lim 61% 5% 28% 6% 100% 28,700 4.67 10,700 9,600 Senior Vice President (Line Maintenance & Business Development) Zarina Piperdi 59% 6% 30% 5% 100% 28,700 4.67 10,700 9,600 Senior Vice President (Human Resources) Ivan Neo Seok Kok 63% 6% 27% 4% 100% 42,800 4.67 10,700 – Senior Vice President (Aircraft & Component Services) (appointed on 1 October 2007)

The above remuneration bands do not include the value of the share options under ESOP and share awards under SIAEC RSP and SIAEC PSP. # Includes profit-sharing bonus determined on an accrual basis for the financial year ended 31 March 2008. * Depending on the achievement of pre-determined targets over a two-year period for the SIAEC RSP and a three-year period for the SIAEC PSP, the final number of shares awarded could range between 0% and 120% of the initial grant for the SIAEC RSP, and between 0% to 150% of the initial grant for the SIAEC PSP.

Details of the Company’s ESOP, RSP and PSP, and the options and/or awards granted can be found on page 79 of the Report by the Board of Directors in this Annual Report.

60 Profile of Senior Executives Mr Png Kim Chiang Senior Vice President (Commercial) Mr William Tan Seng Koon President & Chief Executive Officer Mr Png joined Singapore Airlines Ltd (SIA) in 1975 and has served in various departments of the Mr William Tan is the President & Chief Executive Engineering Division of SIA. He was appointed Vice Officer of SIA Engineering Company (SIAEC). President Engineering Supplies in 1998. In April The SIAEC Group of companies, with its main 2001, Mr Png was transferred to SIA Engineering operations in Singapore and 21 joint ventures in Company as its Senior Vice President (Services). In seven countries, caters to a global customer base September 2005, he was appointed as Senior Vice of more than 85 international airlines. President (Commercial) and is currently responsible Prior to his appointment as President & CEO of for Marketing and Sales, Fleet Management and SIAEC in May 2001, Mr Tan served in various Partnership Management Divisions. senior management positions in Singapore Airlines Mr Png is the Chairman of Aerospace Component Ltd from 1978, including Senior Vice President Engineering Services Pte Ltd and Pan Asia Pacific Engineering from 1999 to 2001. Aviation Services Ltd, Deputy Chairman of Goodrich Mr Tan is the Chairman of JAMCO Aero Design & Aerostructures Service Centre-Asia Pte Ltd and a Engineering Pte Ltd and Singapore JAMCO Pte Ltd, Director of Eagle Services Asia Pte Ltd, Hong Kong Deputy Chairman of Eagle Services Asia Pte Ltd Aero Engine Services Ltd and Tiger Aviation Pte Ltd. and Singapore Aero Engine Services Pte Ltd and Mr Png holds a Bachelor of Science (Honours) a Director of SIAEC Global Pte Ltd. degree in Computation from the University of Mr Tan graduated from the University of Singapore Manchester Institute of Science and Technology as with a Bachelor of Science (Engineering) degree and well as a Master of Business Administration degree holds a Diploma in Business Administration from the from the National University of Singapore. National University of Singapore. Mr Jack Koh Swee Lim Mr Chan Seng Yong Senior Vice President (Line Maintenance and Senior Vice President (Services) Business Development) Mr Chan joined the Engineering Division of Mr Jack Koh joined Singapore Airlines Ltd (SIA) in 1971, Singapore Airlines Ltd in 1968. In 1997, he was served as Vice President Technical Projects in 1999 and appointed Vice President Engineering Planning. was appointed Divisional Vice President Engineering in In April 2000, Mr Chan was transferred to SIA 2001 before joining SIA Engineering Company. Engineering Company and was appointed the Mr Koh was appointed Senior Vice President (Line Senior Vice President (Operations) responsible for Maintenance and Materials) in SIA Engineering all operational divisions. In September 2005, he Company in September 2005 and Senior Vice became Senior Vice President (Services) and took President (Line Maintenance and Business charge of the Facilities Development, Engineering Development) in October 2007. He is currently in and Information Technology, Productivity and charge of Business Development Division and the Engineering Training Divisions. operations at Line Maintenance Division. Mr Chan is a Director on the Boards of Combustor He is the Chairman of Aircraft Maintenance Services Airmotive Services Pte Ltd, Asian Surface Australia Pty Ltd and Aviation Partnership (Philippines) Technologies Pte Ltd and Fuel Accessory Service Corporation, Deputy Chairman of PT JAS Aero- Technologies Pte Ltd. Engineering Services, and a Director on the In addition to aircraft maintenance qualifications, Boards of SIA Cargo Pte Ltd, International Engine Mr Chan holds a Bachelor of Business (Business Component Overhaul Pte Ltd and Singapore Aero Administration for Information Technology) Engine Services Pte Ltd. degree from the Royal Melbourne Institute of Mr Koh holds a Bachelor of Business from Curtin Technology, Australia. University (Australia) and a Master of Business 61 Administration from Monash University, Australia. Ms Zarina Piperdi the Nominating Committee. For FY2007/08, the Senior Vice President (Human Resources) members of the Nominating Committee were: Ms Piperdi joined Singapore Airlines Ltd (SIA) in Chairman Paul Chan Kwai Wah 1983 and had been posted to various positions in (retired on 21 October 2007) the Finance Division. In 1991, she was posted to Tan Bian Ee Los Angeles as SIA’s Regional Finance & Admin (elected Chairman on 22 October 2007) Manager America. She joined SIA Cargo Pte Ltd Members Chew Choon Seng in 1997 to spearhead the formation of the cargo Oo Soon Hee airline and was appointed as Vice President Finance (appointed on 15 August 2007) & Human Resources in 2001. In March 2006, Ms Piperdi was transferred to SIA Engineering The Nominating Committee is focused on maintaining Company and was appointed Senior Vice President a strong element of independence in the composition (Human Resources) in November 2006. of the Board and the Board Committees. Ms Piperdi is the Deputy Chairman of Messier Pursuant to Article 83 of the Company’s Articles Services Asia Pte Ltd and is a Director on the Board of Association, the nearest one third of the Board of SIAEC Global Pte Ltd. will retire each year. Retiring Directors are usually those who have been longest in office since their Ms Piperdi holds a Bachelor of Accountancy (Honours) last election, and are eligible to offer themselves degree from the National University of Singapore and for re-election under Article 84. Directors appointed has completed a Senior Executive Programme at subsequent to the last Annual General Meeting London Business School. Ms Piperdi is also a Fellow (“AGM”) also retire and are eligible for re-election at of the Institute of Certified Public Accountants. the next AGM in accordance with Article 90. Mr Ivan Neo Seok Kok At the 26th AGM to be held on 18 July 2008, Chew Senior Vice President (Aircraft and Choon Seng, Koh Kheng Siong and Bey Soo Khiang Component Services) will retire under Article 83, and Ron Foo Siang Guan, Mr Neo joined Singapore Airlines Ltd (SIA) in 1975. Lim Joo Boon and Oo Soon Hee will retire under He served in various capacities in the Engineering Article 90. Bey Soo Khiang, having served on the Division of SIA before his transfer to SIA Engineering Board since March 2000, will retire at the close of Company in 1993. the 2008 AGM. In SIA Engineering Company, Mr Neo was appointed After assessing their respective contributions, Vice President in charge of Quality & Safety in 2001, including their attendance, preparedness and and Base Maintenance and China Projects in 2004. participation at Board and Committee meetings, the In October 2007, Mr Neo was promoted to Senior Nominating Committee recommends the re-election Vice President (Aircraft & Component Services) and of Chew Choon Seng, Koh Kheng Siong, Ron Foo is currently responsible for Base Maintenance and Siang Guan, Lim Joo Boon and Oo Soon Hee. Workshops Divisions. The Company is also proposing the election of Mr Neo is a director of Fuel Accessory Service Ng Chin Hwee to succeed Bey Soo Khiang. Technologies Pte Ltd. During the year under review, the Nominating In addition to possessing an Aircraft Maintenance Committee also attended, inter alia, to the following: Engineer’s Licence, Mr Neo holds a Master of Business and Technology degree from the University a) recommended the appointment of Andrew Lim of New South Wales. Ming-Hui as a member of the Audit Committee and Paul Chan Kwai Wah as a member of NOMINATING COMMITTEE (Principle 4) the Compensation & HR Committee and an Three non-executive Directors, two of whom are alternate member of the Board Committee with independent (including the Chairman), make up effect from 20 July 2007;

62 b) recommended the appointment of Ron Foo Members Chew Choon Seng Siang Guan, Lim Joo Boon and Oo Soon Hee Bey Soo Khiang as Directors from 1 August 2007; Alternate Paul Chan Kwai Wah c) recommended the appointment of Ron Foo (appointed on 20 July 2007) Siang Guan as a member of the Audit Committee, The Board Committee does not hold physical Lim Joo Boon as a member of the Compensation meetings. In practice, resolutions are passed by the & HR Committee and Oo Soon Hee as a member Board Committee by circulation in writing. Resolutions of the Audit Committee and the Nominating approved by the Board Committee are reported to the Committee from 15 August 2007; Board at the meeting following the circulation. d) elected Tan Bian Ee as the Chairman of the The Board Committee has relieved the Board of Nominating Committee with effect from routine day-to-day matters that require Board 22 October 2007; approval. The swiftness of their deliberation and decision-making enables the Company to deal with e) determined the independence/non- matters expeditiously in its daily operations. independence of Directors based on individual Director’s declaration; RISK MANAGEMENT (Principle 12) SIAEC formalised its Risk Management Framework f) considered and recommended Directors to in 2001 to assist business units in identifying retire by rotation and offer themselves for and reporting risks within the Company. The Risk re-election at the AGM for 2008; Management Committee (‘RMC’), chaired by the g) considered and recommended the election Chief Executive Officer, assists the Audit Committee of Ng Chin Hwee to succeed Bey Soo Khiang; (‘AC’) and the Board to drive risk management activities within the Company. h) reviewed the core competencies of Directors in relation to the needs of the Company Under the Company’s Risk Management reporting and updated the “Skills Matrix” to denote structure, the adequacy of operational and the experience and expertise of the current compliance controls (for business, operational and Directors. The matrix will also be useful in the strategic risks) is reviewed directly by the Board. search for future candidates for appointment Financial risk controls, on the other hand, are to the Board; and reviewed firstly by the AC and then the Board.

i) considered ongoing training of Directors. Board of Directors Board Committee

The Board Committee deputises for the Board on Reports to the Board on: Reviews the (i) Business Risks effectiveness of the routine matters to facilitate day-to-day administration risk management (ii) Strategic Risks structure and process and to expedite decisions thereon, including (iii) Operational Risks opening of bank accounts, affixing the Company’s seal on documents requiring the Company’s seal, Audit Committee and authorising specific officers to sign pertinent documents on behalf of the Company. The Board Risk Management Reports on Financial Committee (RMC) Risks to the Board Committee also approves capital expenditures from through the Audit $1.5 million to $5 million, and investments in joint Committee ventures of up to $5 million. Approvals of values below the base level of $1.5 million, except for investments in Risk Co-ordinators joint ventures, are referred to the Senior Management Committee. At the date of this report, the Board Committee comprised: Divisional Heads (Risk Owners) 63 Risk Processes and Activities INTERNAL AUDIT (Principle 13) The following risk-related processes and activities The Company has an internal audit function, which were carried out by the Company in FY2007/08: is undertaken by the Internal Audit Department of Singapore Airlines (“SIA Internal Audit Department”), a) Annual Risk Management Review the Company’s holding company. It is designed The Company carried out its Annual Risk to provide reasonable assurance about the Management Review in January 2008. Risks effectiveness and efficiency of operations, reliability identified by various departments were of financial information and compliance with the consolidated and reviewed by the RMC before Company’s policies and procedures, applicable being surfaced to the Board. The Company’s laws and regulations. The internal auditors report Risk Register was also updated. directly to the Company’s Audit Committee. In situations where the audit work to be carried out b) Business Disruption Exposure by SIA Internal Audit Department could give rise to The business interruption impact of the potential conflicts of interest, such as audit work Company’s top risks was reviewed with the relating to transactions between the Company help of an external consultant. The exercise and Singapore Airlines, the Audit Committee may provides assurance that mitigation action authorise such audit work to be carried out by an measures and insurance coverage of key risks independent third party as it deems appropriate. remain appropriate and adequate. The Company’s internal audit function meets the standards set by the Institute of Internal Auditors. c) Managing Joint Venture (‘JV’) Risks In FY2007/08, the RMC reviewed its key Information technology audits are managed by SIA process controls in managing JV-related Internal Audit staff who are Certified Information risks, and established a JV Risk Management System Auditors. Reporting framework. To further embed risk Management Committees management across the SIAEC Group of Companies, workshops were also conducted The Company has Management Committees, to share with JV partners the processes and which provide an intermediate and objective best practices of risk management. avenue for reviewing the Company’s policies and procedures. More importantly, these Committees d) Risk Oversight and Audit enable the Management to closely monitor the entire Regular independent assessments are expanse of the Company’s business and operations. essential to ensure that established risk Each Management Committee is tasked to oversee controls are effective and being complied specific areas pertaining to the operations of the with. In February 2008, SIA Internal Audit Company. These Committees hold meetings with Department performed a risk management varying frequency, from daily, weekly, bi-weekly audit of the Company. The auditors were to monthly. satisfied with the Company’s risk management The functions of the various Committees include processes, and assessed that its risk reviewing operational efficiency and effectiveness, methodology has been maintained and managing operational risks and maintaining internal consistently applied at all levels. controls, recommending and approving capital expenditures, evaluating IT system projects, ensuring Having reviewed the risk management practices occupational safety and health, reviewing staff and activities of the Company, the Board of development and progression, developing investor Directors believe that, in the absence of evidence relations strategies, approving tender exercises and to the contrary, a satisfactory system of internal tender awards, and addressing issues relating to controls and risk management is maintained by the service standards, quality and productivity. Company’s Management.

64 COMMUNICATIONS WITH SHAREHOLDERS The Company prepares minutes of meetings, (Principle 14 & 15) incorporating, inter alia, comments or views expressed by Shareholders and the Board’s and/or The Company strives to convey to Shareholders Management’s responses thereto. The final minutes pertinent information in a clear, detailed and timely are made available to Shareholders on request. manner and on a regular basis. The Company holds analyst briefings of its second-quarter and full- Securities Transactions year results. These results are published through As recommended by the SGX-ST’s Best Practices SGXNET and press releases, and on the Company’s Guide, the Company has a set of Policy and website. Since July 2003, the Company has been Guidelines for dealings in the Company’s securities, releasing quarterly reports of its corporate results. which has been disseminated to employees and The Company’s Investor Relations Department Directors. The Policy and Guidelines restrict communicates with analysts regularly and monitors certain employees from trading in the Company’s the dissemination of material information to ensure securities during the period two weeks prior to the that it is disclosed to the market in a timely manner announcement of corporate results for the first three and on a non-selective basis. quarters of the financial year, and one month prior to the announcement of full-year results, and ending At Shareholders’ meetings, every matter requiring on the date of announcement of the results. These approval is proposed as a separate resolution. While employees include all Administrative Officers and Shareholders have a right to appoint proxies to above, regardless of department or division; and attend and vote at General Meetings on their behalf, certain other employees in departments which are the Company’s Articles of Association currently likely to be privy to confidential and material price- do not provide for Shareholders to vote at General sensitive information, including employees in the Meetings in absentia. The Company will consider offices of the Chief Executive Officer and Senior amending its relevant Articles of Association if the Vice Presidents, Finance, Corporate, Business Board is of the view that there is justifiable demand Development, Partnership Management, Marketing for absentia voting, and after the Company has & Sales Divisions, and any other employee and/or evaluated and put in place the necessary measures divisions/departments notified from time to time. to facilitate such voting and protection against The Policy and Guidelines also remind employees errors, fraud and other irregularities. and Directors to be mindful of the insider trading The Chairmen of the Audit Committee, Nominating prohibitions under the Securities and Futures Act Committee and Compensation & HR Committee, 2001 whenever trading in the Company’s or any and members of the respective Committees, as well other corporation’s securities. as the external auditors, plan to be in attendance at the Company’s General Meeting to address questions from Shareholders.

The Company’s Score-card on Compliance with the Code

Code Principle, Guidelines & Commentaries Page Reference Compliance of this Report Principle 1: The Board’s Conduct of Affairs 54 3 Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

Principle 2: Board Composition and Guidance 56 3 There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making. 65 Code Principle, Guidelines & Commentaries Page Reference Compliance of this Report Principle 3: Chairman and Chief Executive Officer 56 3 There should be a clear division of responsibilities at the top of the company – the working of the Board and the executive responsibility of the company’s business – which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

Principle 4: Board Membership 56, 62 3 There should be a formal and transparent process for the appointment of new Directors to the Board. Principle 5: Board Performance 56 3 There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each Director to the effectiveness of the Board. Principle 6: Access to Information 57 3 In order to fulfil their responsibilities, Board Members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis. Principle 7: Procedures for Developing Remuneration Policies 58 3 There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. No Director should be involved in deciding his own remuneration. Principle 8: Level and Mix of Remuneration 59 3 The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. Principle 9: Disclosure of Remuneration 59 3 Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. Principle 10: Accountability 57 3 The Board should present a balanced and understandable assessment of the company’s performance, position and prospects. Principle 11: Audit Committee 57 3 The Board should establish an Audit Committee (“AC”) with written terms of reference, which clearly set out its authority and duties. Principle 12: Internal Controls 57, 63 3 The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets. Principle 13: Internal Audit 3 The company should establish an internal audit function that is independent 64 of the activities it audits. Principle 14: Communication with Shareholders 65 3 Companies should engage in regular, effective and fair communication with shareholders. Principle 15: Greater Shareholder Participation 65 3 Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. 66 the financials

contents

68 Financial Review 91 Notes to the Financial Statements 76 Report by the Board of Directors 147 Additional Information 82 Statement by the Directors 149 Quarterly Results of the Group 83 Auditor’s Report 150 Five Year Financial Summary of the Group 85 Consolidated Profit and Loss Account 152 Group Corporate Structure 86 Balance Sheets 153 Shareholding Statistics 87 Statement of Changes in Equity 154 Share Price and Turnover 90 Consolidated Cash Flow Statement The Group’s pershare basicearnings rose 0.7cents(+3.2%) to23.7cents. taxation increased $14.5million(+5.4%)to$285.5million. $157.8 million. to (+13.1%) million $18.3 by increasing profits with performance strong their continued companies 31 ended year financial the for million $253.8 of Company the of holders equity to attributable profit a achieved Group The earnings 1050 $ million 150 300 450 600 750 900 cents 20 25 30 10 15 0 5 030 040 2005-06 2004-05 2003-04 030 040 2005-06 2004-05 2003-04 O Group RevenueandExpenditure perating profit was $102.9 million, an increase of $0.9 million (+0.9%) from last year. Profit before before Profit year. last from (+0.9%) million $0.9 of increase an million, $102.9 was profit perating Basic earnings pershareBasic earnings (cents) on total assets Return on average shareholders’Return funds on turnover Return Expenditure Revenue Group ProfitabilityRatios arch 2008, an increase of $11.7 million (+4.8%) over last year. Associated and joint venture joint year.and last Associated over (+4.8%) million $11.7 of increase an 2008, March (%) (%) 2006-07 2006-07 2007-08 (%) 2007-08 percent ilo $million $ million 0 10 5 15 20 25 30 150 300 450 600 750 900 1050 Return onturnover Return Return on average average on Return Return ontotalassets Return shareholders’ funds Profit AttributabletoEquityHoldersoftheCompany Group OperatingProfit,ProfitBefore Taxationand 100 150 200 250 300 50 0 030 040 2005-06 2004-05 2003-04 Profitability RatiosoftheGroup Operating profit Profit before taxation Profit attributabletoequityholdersoftheCompany 2007-08 25.1 23.9 18.0 %

2006-07 2006-07 48+0.3 24.8 38+0.1 23.8 84-0.4 18.4 % financial 2007-08

%points Change $ million 0 50 100 150 200 250 300

review 68 sia engineering company ANNUAL REPORT 2007/08 financial review

REVENUE

In 2007-08, the Group’s revenue exceeded $1 billion for the first time, growing 3.3% or $32.2 million to $1,009.6 million.

The Group’s revenue composition is as follows:

2007-08 2006-07 Change $ million $ million $ million % Airframe and component overhaul services 603.1 591.8 +11.3 +1.9 Line maintenance and technical ground handling 335.4 309.5 +25.9 +8.4 Fleet management programmes 71.1 76.1 -5.0 -6.6 Total 1,009.6 977.4 +32.2 +3.3

Line maintenance revenue grew by 8.4% to $335.4 million with an increase in the number of flights handled at Changi Airport. Revenue from airframe and component overhaul work increased by 1.9% to $603.1 million from higher workload. These increases were partially offset by a 6.6% decline in fleet management revenue to $71.1 million.

Airframe and component overhaul services, line maintenance and fleet management work contributed 59.7%, 33.2% and 7.1% respectively to the Group’s revenue.

Group Revenue Composition

7.1% 7.8%

RT 2007/08 33.2% 2007-08 31.7% 2006-07 O

59.7% 60.5% ANNUAL REP

Airframe and component overhaul services Line maintenance and technical ground handling Fleet management programmes engineering c om pany sia

69 The increase intheGroup’s expenditure camefrom: In 2007-08,theGroup’s expenditure was$906.7million,anincrease of$31.3million(+3.6%)overlastyear. E of tradedebtors$3.2millioncompared toawrite-backof$4.2millionlastyear. increased $8.8 million (+4.0%) mainly due to higher depreciation of $6.3 million and a provision for impairment growth. support to subsidiaries and Company the in staffing in increase an to due mainly (+5.2%) million $21.8 rose costs Staff Total Overheads Material costs Staff costs XPENDITURE 48.5% aterial costs increased marginally by $0.7 million (+0.3%) to $235.6 million. $235.6 to (+0.3%) million $0.7 by marginally increased costs Material 2007-08 25.5% 26.0% Group ExpenditureComposition Staff costs Overheads Material costs $ million 2007-08 906.7 231.1 235.6 440.0 47.8%

$ million 2006-07 2006-07 7. 3. +3.6 +4.0 +31.3 +0.3 +8.8 +0.7 +5.2 875.4 +21.8 222.3 234.9 418.2

25.4% 26.8% $ million Change financial Overheads % review 70 sia engineering company ANNUAL REPORT 2007/08 financial review

SHARE OF PROFITS OF ASSOCIATED AND JOINT VENTURE COMPANIES

Share of profits from associated and joint venture companies increased $18.3 million (+13.1%) to $157.8 million. This represents 55.3% of the Group’s pre-tax profits.

TAXATION

The Group’s provision for taxation was $31.2 million in 2007-08, an increase of $1.8 million (+6.1%) compared to that in 2006-07 mainly due to higher profitability.

FINANCIAL POSITION

Equity attributable to equity holders of the Company stood at $1,125.3 million as at 31 March 2008, an increase of $128.2 million (+12.9%) from a year ago. Correspondingly, the net asset value per share of the Group rose 10.8 cents (+11.5%) to 104.7 cents as at 31 March 2008.

Total assets of the Group increased $98.5 million (+7.5%) to $1,413.5 million at the end of the financial year under review. The net liquid assets of the Group was $437.2 million as at 31 March 2008, $39.6 million (+10.0%) higher than at 31 March 2007.

Equity Attributable to Equity Holders of the Company, Total Assets and Net Asset Value Per Share Net Liquid Assets

$ million cents $ million $ million 1500 120 500 500

1250 110 400 400 100 1000 300 300 90 RT 2007/08

O 750 80 200 200 500 70 100 100 ANNUAL REP 250 60

0 50 0 0 2003-04 2004-05 2005-06 2006-07 2007-08 2003-04 2004-05 2005-06 2006-07 2007-08 Equity attributable to equity holders of the Company ($ million) Total assets ($ million) Net asset value per share (cents) engineering c om pany sia

71 100 150 200 250 300 $ million 31 31 at as $214,545,053 from increased Company the of capital share The SHARE CAPIT cash flowtocapitalexpenditure fellto3.76timesfrom 4.27timeslastyear. of ratio self-financing The million. $220.0 to (+9.5%) million $19.1 the increased flow in cash generated Internally than higher (+24.2%) million $11.4 million, $58.5 was Group previous year. the by expenditure capital 2007-08, In CAPIT Employee Share OptionPlan. 31 at As the for share per $4.67 of price the at shares ordinary exercise periodfrom 2July2008to12017. for subscribe to employees eligible by accepted were O exercise ofshare optionsundertheEmployeeShare OptionPlan. 50 n 2 July 2007, the Company made a ninth grant of share options to employees. 15,483,000 share options options share 15,483,000 employees. to options share of grant ninth a made Company the 2007, July 2 n 0 M Capital Expenditure,InternallyGenerated 030 040 2005-06 2004-05 2003-04 arch 2008. The increase was due to the issuance of 12,423,925 new ordinary shares pursuant to the the to pursuant shares ordinary new 12,423,925 of issuance the to due was increase The 2008. arch Cash FlowandSelf-FinancingRatio AL EXPENDITUREANCASHFLOW Self-financing ratio generatedcashflow($million) Internally Capital expenditure ($million) M arch 2008, options to subscribe for 52,004,788 ordinary shares remain outstanding under the the under outstanding remain shares ordinary 52,004,788 for subscribe to options 2008, arch AL ANDSHAREOPTIONS 2006-07 2007-08

ratio 0 2 4 6 8 10 arch 2007 to $245,008,316 as at as $245,008,316 to 2007 March financial

review 72 sia engineering company ANNUAL REPORT 2007/08 financial review

DIVIDENDS

A tax exempt one-tier interim dividend of 4.0 cents per share, amounting to $42.9 million, was paid on 20 November 2007.

A tax exempt one-tier final dividend of 16.0 cents per share, amounting to $171.9 million is proposed for 2007-08. The final dividend, if approved by shareholders during the Annual GeneralM eeting to be held on 18 July 2008, will be paid on 5 August 2008.

VALUE ADDED

Total value added for the Group in 2007-08 was $755.5 million, up $38.5 million (+5.4%) from financial year 2006-07. The increase was mainly attributable to higher revenue (+$32.2 million) and higher share of profits of associated and joint venture companies (+$17.6 million), partially offset by higher purchases of goods and services (+$6.8 million).

Salaries and other staff costs of $440.0 million accounted for 58.2% of the value added. Shareholders received $214.8 million (28.4%) in dividends and $21.7 million (2.9%) went to corporate taxes. The remaining $78.5 million (10.4%) was retained for future capital requirements.

Group Value Added Distribution Group Value Added Productivity Ratios

$ million $ million $ $ 500 500 2.0 2.0

400 400 1.5 1.5

300 300 1.0 1.0

RT 2007/08 200 200 O

0.5 0.5 100 100 ANNUAL REP 0 0 0 0 2003-04 2004-05 2005-06 2006-07 2007-08

-100 -100 2003-04 2004-05 2005-06 2006-07 2007-08 Retained in / (applied from) the business Value added per $ employment cost Employees Value added per $ investment in fixed assets Suppliers of capital Value added per $ revenue Government engineering c om pany sia

73 STATEMENT OFVALUE ADDEDANDITSDISTRIBUTION(in$million) Revenue P Less: Value addedonoperations Dividend incomefrom long-term Add: Net interest income Surplus onsaleoffixedassets Share ofprofits ofassociated / Exceptional item Total valueaddedavailablefordistribution - Salariesandotherstaff costs To employees Applied asfollows: - Corporatetaxes To government - Ordinary dividends To suppliersofcapital - Specialdividends - - - Depreciation Retained forfuture capitalrequirements / - Amortisationofintangibles - Retainedprofit Total valueadded Value addedper$revenue ($) Value addedper$employmentcost($) Value addedper$investmentin applied from thebusiness. who capital. provided have those to and government, employees, to payments of way by the distribution its shows and 2007-08 above to 2003-04 statement The created. wealth of measure a is added Value urchase of goods and services services and goods of urchase M investment joint venture companies (applied from thebusiness) fixed assets($) inority interests interests inority t also indicates the portion retained in the business for future capital requirementsor capital future for business the in retained portion the indicates also It

2007-08 1,009.6 (427.3) 582.3 148.4 755.5 440.0 214.8 755.5 13.7 21.7 33.1 39.0 0.75 1.72 1.38 9.8 1.3 0.5 6.4 - - 060 050 040 2003-04 2004-05 2005-06 2006-07 405 419 375 (269.9) (317.5) (411.9) (420.5) 7. 5. 0. 678.7 807.5 959.1 977.4 5. 4. 9. 408.8 490.0 547.2 556.9 3. 0. 9043.7 69.0 100.6 130.8 1. 7. 7. 453.6 577.0 670.8 717.0 1. 8. 6. 286.7 364.4 380.1 418.2 2. 0. 6145.2 76.1 103.3 127.2 1. 8.)9. (107.1) 94.3 (80.1) 114.8 1. 7. 7. 453.6 577.0 670.8 717.0 541. . 0.4 4.8 11.9 15.4 3692383.0 3.8 9.2 13.6 062. 714.9 17.1 27.8 20.6 902. 0522.9 20.5 25.5 29.0 .307 .10.67 0.71 0.70 0.73 .117 1.58 1.76 1.71 .214 1.40 1.45 1.42 05 02 0.3 (0.2) (0.5) . . . 0.8 0.4 1.9 0.3 . . 4.3 7.0 7.7 - - 207.4 ops au add from added value Group’s - . (3.1) 9.0 - financial 200.9 1.58 1.25 0.1

- review 74 sia engineering company ANNUAL REPORT 2007/08 financial review

STAFF STRENGTH AND INDICES

The Group’s average staff strength in 2007-08 was 6,116, a 8.0% increase from the previous financial year.

2007-08 2006-07 % Change Revenue per employee ($) 165,071 172,651 -4.4 Value added per employee ($) 123,528 126,651 -2.5 Staff costs per employee ($) 71,939 73,867 -2.6 Average number of employees 6,116 5,661 +8.0

Group revenue per employee decreased $7,580 (-4.4%) to $165,071 and value added per employee fell $3,123 (-2.5%) to $123,528.

The Company’s average staff strength was 5,550 in 2007-08, a 7.8% increase from the previous financial year.

Group Strength and Indices Company Strength and Indices

staff number $’000 staff number $’000 7000 200 7000 200

6000 6000

5000 5000 150 150 4000 4000

3000 3000 RT 2007/08

O 100 100 2000 2000

1000 1000

ANNUAL REP 0 50 0 50 2003-04 2004-05 2005-06 2006-07 2007-08 2003-04 2004-05 2005-06 2006-07 2007-08 Revenue per employee ($) Revenue per employee ($) Value added per employee ($) Value added per employee ($) Staff strength Staff strength engineering c om pany sia

75 O O Interest inSingaporeAirlinesLimited N (the “Act”),aninterest intheordinary shares andshare optionsoftheCompany, and ofrelated companies: registerof tothe according under have, kept year be to thefinancial required shareholdings of directors’ end the at office held who directors following The 3. acquisition ofshares andshare optionsin,ordebentures of,theCompanyoranyotherbodycorporate. the which to arrangements N arrangementsToEnableDirectorsAcquire ShaRES ANDDebentures 2. Oo SoonHee Lim JooBoon Ron FooSiangGuan Andrew LimMing-Hui Paul ChanKwaiWah Koh KhengSiong Tan BianEe Bey SooKhiang C Stephen LeeChingY The namesofthedirectors inofficeatthedateofthis report are: 1. the Group andoftheCompanyforfinancialyearended31March of 2008. statements financial audited the with together report their presenting in pleasure have directors The Chew hoonSeng Stephen LeeChingY Bey SooKhiang Chew hoonSeng Koh KhengSiong Paul ChanKwaiWah Ron FooSiangGuan ame ofDirector any subsist there did year, financial that during time any at nor year, financial the of end the at either hew ptions tosubscribeforordinary shares rdinary shares Directors’ InterestsnOrdinary Shares,hare Options AndDebentures Directors OfTheCompany C hoon hoon S eng

en en – chairman –

C (Independent) (appointedasDirector on1August2007) (Independent) (appointedasDirector on1August2007) (Independent) (appointedasDirector on1August2007) (Independent) (Independent) (Independent) (Independent) Deputy ompany is a party, whereby directors might acquire benefits by means of the the of means by benefits acquire might directors whereby party, a is ompany ponmn 1320 21.4.2008 31.3.2008 appointment 1.4.2007/ ,9,0 ,9,0 1,194,000 1,194,000 1,194,000 date of 2,0 2,0 420,000 420,000 420,000 200,000 200,000 214,000 0009409,400 9,400 10,000 5001,0 14,000 14,000 15,000 C hairman hairman

– – Direct interest ection 164 of the of 164 Section – – report bytheboard ofdirectors – – ponmn 1320 21.4.2008 31.3.2008 appointment 1.4.2007/ Singapore date of of date 0001,0 18,800 18,800 20,000 3001,0 12,200 12,200 13,000 – – – – – Deemed interest Companies – – – – – Act, ap. 50 Cap. – – – – –

76 sia engineering company ANNUAL REPORT 2007/08 report by the board of directors

3. Directors’ Interests In Ordinary Shares, Share Options And Debentures (continued)

Direct interest Deemed interest 1.4.2007/ 1.4.2007/ date of date of Name of Director appointment 31.3.2008 21.4.2008 appointment 31.3.2008 21.4.2008

Interest in Singapore Airlines Limited (continued) Conditional award of Restricted Share Plan performance shares Chew Choon Seng 30,000 77,025 77,025 – – – Bey Soo Khiang 10,000 27,215 27,215 – – –

Conditional award of Performance Share Plan performance shares Chew Choon Seng 27,000 77,025 77,025 – – – Bey Soo Khiang 13,500 32,350 32,350 – – –

Interest in SIA Engineering Company Limited Ordinary shares Chew Choon Seng 20,000 20,000 20,000 – – – Bey Soo Khiang 13,000 13,000 13,000 – – – Ron Foo Siang Guan 15,000 15,000 15,000 25,000 25,000 25,000 Oo Soon Hee – – – 2,000 2,000 2,000

Interest in Singapore Airport Terminal Services Limited Ordinary shares Chew Choon Seng 10,000 10,000 10,000 – – –

Interest in Singapore Telecommunications Limited Ordinary shares Stephen Lee Ching Yen 190 190 190 190 190 190 Chew Choon Seng 10,500 10,500 10,500 – – – Bey Soo Khiang 1,550 1,550 1,550 10,370 10,370 10,370 Tan Bian Ee 1,550 1,550 1,550 12,130 12,130 12,130 Koh Kheng Siong 10,500 10,500 10,500 2,900 2,900 2,900 T 2007/08 Paul Chan Kwai Wah 54,600 54,600 54,600 1,550 1,550 1,550 Andrew Lim Ming-Hui 3,566 3,566 3,566 1,550 1,550 1,550 REPOR

L Lim Joo Boon 8,140 8,140 8,140 1,120 1,120 1,120 A U Oo Soon Hee 9,010 9,010 9,010 5,480 5,480 5,480

Interest in SMRT Corporation Limited Ordinary shares Chew Choon Seng 50,000 50,000 50,000 – – – Ron Foo Siang Guan 175,000 100,000 100,000 – – – sia engineering company ANN sia engineering company

77 Bey SooKhiang O Stephen LeeChingY O Koh KhengSiong O Interest inSingaporeTechnologiesEngineeringLimited N 3. Paul ChanKwaiWah U Lim JooBoon Paul ChanKwaiWah Ron FooSiangGuan xcept as disclosed in this report, no other director who held office at the end of the financial yearhad thefinancial of end the of the debentures or at warrants office options, share held shares, in who interests director other no report, this in disclosed as Except Interest inChartered SemiconuctorManufacturing Limited Interest inNeptuneOrientLinesimited Oo SoonHee or a related corporation with the director, or with a firm of which the director is a member, or with a company company a with or member, a is director the which thedirector hasa substantial financialinterest. which of firm a with or director, the with corporation related a or C E 4. at thebeginningoffinancialyear, ordateofappointmentiflater, or attheendoffinancialyear. Interest inmapletreelogisticstrust xcept as disclosed in the financial statements, since the end of the previous financial year, no director of the of director no year, financial previous the of end the since statements, financial the in disclosed as xcept ame ofDirector nits inMapletree LogisticsT ompany has received or become entitled to receive a benefit by reason of a contract made by the the by made contract a of reason by benefit a receive to entitled become or received has ompany rdinary shares rdinary shares rdinary shares Directors’ InterestsnOrdinary Shares,hareOptionsAndDebentures(continued) Directors’ ContractualBenefits en rust ponmn 1320 21.4.2008 31.3.2008 appointment 1.4.2007/ date of 0003,0 30,000 30,000 30,000 34,361 34,361 34,361 5004,0 5003003003,000 3,000 3,000 45,000 45,000 45,000 ,0 ,0 ,0 ,0 ,0 1,000 1,000 1,000 1,000 1,000 1,000 ,0 ,0 2,000 2,000 2,000

– – – Direct interest – – – 274,444 report bytheboard ofdirectors ompany, or of related companies, either companies, related of or Company, – – ponmn 1320 21.4.2008 31.3.2008 appointment 1.4.2007/ date of of date 1,0 1,0 110,000 110,000 110,000 5004,0 45,000 45,000 45,000 – – – – Deemed interest – – – – C ompany ompany – – – –

78 sia engineering company ANNUAL REPORT 2007/08 report by the board of directors

5. options on Shares in the Company

(i) Employee Share Option Plan

The SIA Engineering Company Limited Employee Share Option Plan (the “Plan”), which comprises the Senior Executive Share Option Scheme and the Employee Share Option Scheme for senior executives and all other employees respectively, was approved by shareholders on 9 February 2000.

Under the Plan, all options to be issued will have a term no longer than 10 years from the date of grant. The exercise price of the option will be the average of the closing prices of the Company’s ordinary shares on the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the five market days immediately preceding the date of grant.

Under the Employee Share Option Scheme, options will vest two years after the date of grant. Under the Senior Executive Share Option Scheme, options will vest:

(a) one year after the date of grant for 25% of the ordinary shares subject to the options;

(b) two years after the date of grant for an additional 25% of the ordinary shares subject to the options;

(c) three years after the date of grant for an additional 25% of the ordinary shares subject to the options; and

(d) four years after the date of grant for the remaining 25% of the ordinary shares subject to the options.

at the date of this report, the Compensation and HR Committee administering the Plan comprises the following directors:

paul Chan Kwai Wah – chairman Chew Choon Seng Koh Kheng Siong Lim Joo Boon

no options have been granted to controlling shareholders or their associates, or parent group employees.

no employee has received 5% or more of the total number of options available under the Plan.

T 2007/08 The options granted by the Company do not entitle the holders of the options, by virtue of such holding, to any rights to participate in any share issue of any other company. REPOR L A

U During the financial year, in consideration of the payment of $1.00 for each offer accepted, offers of options were granted pursuant to the Plan in respect of 15,483,000 unissued shares in the Company at an exercise price of $4.67 per share. sia engineering company ANN sia engineering company

79 o employee has received 5% or more of the total number of shares granted under the under granted shares of number total the of more or 5% received has employee no n paulChanKwaiWah the report, this of date the at (ii) t the end of the financial year, options to take up 52,004,788 unissued shares inthe shares unissued up52,004,788 totake options year, financial the of end the at (i) optionsonSharesintheCompany (continued) 5. under theRSPandPSP Lim JooBoon Koh KhengSiong Chew hoonSeng and PSPcomprisesthefollowingdirectors: 150% to 0% of theinitialgrantperformanceshares. between and shares restricted the of grant the initial the for of 120% and 0% period between range could two-year a over targets the for period pre-determined three-year of achievement the on Depending approved theadoptionofRSPandPSP A Restricted Share Plan(“RSP”)andPerformanceShare Plan(“PSP”) were outstanding: Employee Share OptionPlan(continued) te xrodnr gnrl etn o the of meeting general extraordinary the at * other thanasdetailedinN ote 34tothefinancialstatements. 80.0022100(680 7470 ,6,0 16 28.03.2001-27.03.2010 $1.65 1,469,500 (734,700) (46,800) 2,251,000 28.03.2000 Date ofgrant 30.0020763(760 4300 ,8,1 15 03.07.2001-02.07.2010 $1.55 1,487,013 (483,000) (37,600) 2,007,613 03.07.2000 20.0111390(600 3830 1,0 10 02.07.2002-01.07.2011 $1.01 719,600 (358,300) (26,000) 1,103,900 02.07.2001 10.0258115(560 16115 ,9,5 19 01.07.2003-30.06.2012 $1.98 4,194,350 (1,631,175) (45,600) 5,871,125 01.07.2002 10.0317825(240 5350 ,9,7 13 01.07.2004-30.06.2013 $1.35 1,192,275 (563,550) (32,400) 1,788,225 01.07.2003 10.0457250(340 14995 ,8,2 16 01.07.2005-30.06.2014 $1.69 4,289,225 (1,429,925) (73,400) 5,792,550 01.07.2004 10.051,4,7 1110 71250 ,5,7 22 01.07.2006-30.06.2015 $2.25 8,550,875 (7,182,500) (111,100) 15,844,475 01.07.2005 30.061,7,0 2905 4,7)1,8,5 34 03.07.2007-02.07.2016 $3.44 14,782,550 (40,775) (249,075) 15,072,400 03.07.2006 20.071,8,0 (163,600) 15,483,000 02.07.2007 The exercise pricesreflected here are the theexercise pricesaftersuchadjustments. by approval following 2006 July said 25 The 2004. July 28 on said the 2004, the July by 26 approval on Following $0.20 of dividend. special a of declaration the of the t the extraordinary general meeting of the the of meeting general extraordinary the t o shares have been granted to controlling shareholders or their associates, or parent group employees employees group parent or associates, their or shareholders controlling to granted been have shares o a t alw o ajsmn t te xrie rcs f h eitn otos y the by options existing the of prices exercise the to adjustment for allow to Plan date ofgrant 52428(8,7)(24395 52,004,788 (12,423,925) (785,575) 65,214,288 Balance at 1.4.2007/

C chairman – . ommittee approved another $0.20 reduction in the exercise prices of the share options outstanding on on outstanding options share the of prices exercise the in reduction $0.20 another approved ommittee PSP N umber of options to subscribe subscribe to options of umber for unissuedordinary shares Cancelled mite prvd rdcin f 02 i te xrie rcs f h sae pin outstanding options share the of prices exercise the in $0.20 of reduction a approved Committee , the final number of restricted shares and performance shares awarded shares performance and shares restricted of number final the , mays hrhles f h dcaain f seil iied f 02 o 2 Jl 2006. July 21 on $0.20 of dividend special a of declaration the of shareholders Company’s may ed n 6 uy 04 the 2004, July 26 on held Company mesto ad HR and Compensation

Exercised , inadditiontotheEmployeeShare OptionPlan. C ompany held on 25 July 2005, the the 2005, July 25 on held ompany – mays hrhles f h dcaain f seil dividend special a of declaration the of shareholders Company’s 53940$.702.07.2008-01.07.2017 $4.67 15,319,400 Balance at 31.3.2008 report bytheboard ofdirectors mite hc amnses the administers which Committee mays hrhles prvd n mnmn to amendment an approved shareholders Company’s Exercise mite diitrn the administering Committee price* C ompany’s shareholders shareholders ompany’s Exercisable period and RSP a, n h event the in Plan, RSP Company n a and PSP RSP ,

80 sia engineering company ANNUAL REPORT 2007/08 report by the board of directors

5. options on Shares in the Company (continued)

(ii) Restricted Share Plan (“RSP”) and Performance Share Plan (“PSP”) (continued)

The details of the shares awarded under RSP and PSP are as follows:

RSP Number of Restricted shares Balance at 1.4.2007/ Shares cancelled Shares released during Date of grant date of grant during financial year financial year Balance at 31.3.2008

03.07.2006 203,200 (8,300) – 194,900 02.07.2007 339,600 (1,300) – 338,300 542,800 (9,600) – 533,200

PSP Number of Performance shares Balance at 1.4.2007/ Shares cancelled Shares released during Date of grant date of grant during financial year financial year Balance at 31.3.2008

03.07.2006 36,900 (5,800) – 31,100 02.07.2007 61,200 –– – 61,200 98,100 (5,800) – 92,300

6. audit Committee

The Audit Committee performed the functions specified in the Singapore Companies Act. The functions performed are detailed in the Report on Corporate Governance.

7. auditors

The auditors, Ernst & Young, Public Accountants and Certified Public Accountants, have expressed their willingness to accept re-appointment. T 2007/08

On behalf of the Board, REPOR L A U

STEPHEN LEE CHING YEN Chairman

CHEW CHOON SENG Deputy Chairman sia engineering company ANN sia engineering company

Dated this 6th day of May 2008 81 Dated this6 Deputy Chairman CHEW CHOONSENG Chairman STEPHEN LEECHINGYEN On behalfoftheBoard, (b) (a) Limited, dohereby statethat,intheopinionofdirectors: We, We,

S changes in equity and cash flows of the the of flows cash and equity in changes its debtsasandwhentheyfalldue. the that believe to grounds reasonable are there statement this of date the at year endedonthatdate;and the of affairs of state the of view fair and consolidated cash flow statements together with notes thereto are drawn up so as to give a true and the accompanying balance sheets, consolidated profit and loss account, statements of changes in equity, tephen Lee Lee tephen th dayofMay2008 C hing hing

Y en and and en

C hew hew C hoon hoon Pursuant toSection201(15)oftheSingaporeCompaniesAct,Cap.50 roup and of the of and Group G roup and the changes in equity of the the of equity in changes the and roup S eng, being two of the directors of of directors the of two being eng, ompany as at 31 at as Company statement bythedirectors arch 2008 and the results, the and 2008 March C ompany will be able to pay pay to able be will ompany SIA C ompany for the financial financial the for ompany

E ngineering ngineering C ompany ompany 82 sia engineering company ANNUAL REPORT 2007/08 auditor’s report To the Members of SIA Engineering Company Limited

We have audited the accompanying financial statements ofSIA Engineering Company Limited (the “Company”) and its subsidiary companies (collectively, the Group) set out on pages 85 to 146, which comprise the balance sheets of the Group and the Company as at 31 March 2008, the statements of changes in equity of the Group and the Company, and the profit and loss account and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheet and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.I n making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

T 2007/08 audit opinion. REPOR L A U sia engineering company ANN sia engineering company

83 Dated this6 Singapore Public AccountantsandCertified Ernst &Young (ii) (i) In ouropinion, Opinion Financial with theprovisions oftheAct. in incorporated companies the accounting and other records required by the the changesinequityofCompanyforyearendedonthatdate;and of the the of equity the of statements financial consolidated the

Company as at 31 th ofMay2008 Reporting

C ompany are properly drawn up in accordance with the provisions of the the of provisions the with accordance in up drawn properly are ompany tandards so as to give a true and fair view of the state of affairs of the of affairs of state the of view fair and true a give to as so Standards March 2008 and the results, changes in equity and cash flows of the S ingapore of which we are the auditors have been properly kept in accordance in accordance kept properly been have we auditors are the of which ingapore roup, and the balance sheet and statement of changes in changes of statement and sheet balance the and Group,

Act to be kept by the To theMembersofSIAEngineeringCompanyLimited Company and by those subsidiary A ct and and ct auditor’s report roup andGroup Group and S ingapore ingapore 84 sia engineering company ANNUAL REPORT 2007/08 consolidated profit and loss account For the financial year ended 31 March 2008 (in thousands of $)

The Group Notes 2007-08 2006-07

REVENUE 3 1,009,572 977,376

EXPENDITURE Staff costs 4 439,982 418,161 Material costs 235,587 234,902 Depreciation 14 33,080 26,794 Amortisation of intangibles 15 6,387 7,706 Company accommodation 43,214 42,455 Subcontract costs 82,343 84,015 Other operating expenses 66,100 61,314 906,693 875,347 OPERATING PROFIT 5 102,879 102,029 Interest income 6 9,796 13,676 Interest on external borrowings (34) (33) Surplus on disposal of fixed assets 1,331 274 Dividend received from long-term investment 13,682 15,452 Share of profits of associated companies 107,088 106,136 Share of profits of joint venture companies 50,827 33,427 PROFIT BEFORE TAXATION 285,569 270,961 Taxation 7 (31,232) (29,388) PROFIT FOR THE FINANCIAL YEAR 254,337 241,573

PROFIT ATTRIBUTABLE TO: EQUITY HOLDERS OF THE COMPANY 253,802 242,073 Minority interests 535 (500) 254,337 241,573 T 2007/08

REPOR BASIC EARNINGS PER SHARE (CENTS) 8 23.7 23.0 L A

U DILUTED EARNINGS PER SHARE (CENTS) 8 23.3 22.5 sia engineering company ANN sia engineering company

85 The notes on pages 91 to 146 form an integral part of these financial statements. SHARE CAPITAL share-based compensationreserve RESERVES

generalreserve EQUITY ATTRIBUTABLE TO MINORITY INTERESTS TOTAL EQUITY DEFERRE TAXATION LONG-TERM LIABILITY FIXED ASSETS Represented by: INTANGIBLES SUBSIDIARY COMPANIES ASSOCIATED COMPANIES JOINT VENTURECOMPANIES LONG-TERM INVESTMENTS CURRENT ASSETS prepayments andotherdebtors immediateholdingcompany relatedparties stocks

short-termdeposits cashandbankbalances CURRENT LIABILITIES Less:

current taxpayable NET CURRENTASSETS The notesonpages91to146forman integralpartofthesefinancialstatements. Foreign currency translationreserve Fair valuereserve EQUITY HOLDERSOFTHECOMPANY Finance leasecommitments–repayable afteroneyear Trade debtors Work-in-progress Trade andothercreditors Bank loans Finance lease commitments – repayable within one year Notes 10 11 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 1,125,318 1,140,158 1,162,046 1,162,046 245,008 937,497 880,310 275,726 343,595 370,881 673,584 231,111 251,484 422,100 2008 (88,378) 28,544 14,840 21,786 11,625 94,394 14,606 69,365 21,788 53,805 29,625 19,181 42,526 66,413 20,323 2,647 The Group 102 50 – – 1,010,410 1,023,601 1,023,601 As at31March2008(inthousandsof$) 214,545 811,796 782,625 997,170 250,328 339,648 369,745 609,433 243,428 291,500 317,933 2007 (47,142) 17,971 13,240 13,191 15,258 85,828 14,606 56,011 73,705 22,221 11,480 35,940 30,556 45,370 9,775 1,952 750 – – – 245,008 635,406 666,597 911,605 911,605 930,224 257,960 164,672 363,466 637,133 211,603 231,167 405,966 930,224 2008 28,544 18,619 10,004 20,417 56,599 14,606 57,187 21,235 51,168 25,229 15,593 41,226 62,029 19,564 2,647 The Company balance sheets – – – – – 214,545 560,382 578,353 792,898 792,898 806,027 233,150 164,672 362,316 579,488 228,818 273,724 305,764 806,027 2007 17,971 13,129 14,916 16,320 56,599 14,606 45,866 73,617 19,099 35,881 24,057 44,906 9,463 9,189 – – – – – – 86 sia engineering company ANNUAL REPORT 2007/08 statement of changes in equity For the financial year ended 31 March 2008 (in thousands of $)

Attributable to Equity Holders of the Company Foreign Share-based currency Share compensation translation Fair value General Minority Notes Capital reserve reserve reserve reserve Total interests Total equity

THE GROUP

Balance at 1 April 2007 214,545 17,971 (47,142) – 811,796 997,170 13,240 1,010,410

Currency translation differences – – (41,236) –– (41,236) 150 (41,086) Net fair value changes on cash flow hedges – –– 2,647 – 2,647 – 2,647 Net income and expense not recognised in the profit and loss account – – (41,236) 2,647 – (38,589) 150 (38,439) Profit for the financial year – ––– 253,802 253,802 535 254,337 Net income and expense recognised for the financial year – – (41,236) 2,647 253,802 215,213 685 215,898

Capital contribution – –––– – 1,146 1,146 Share-based

T 2007/08 payment 11 – 16,415 ––– 16,415 – 16,415 Share options

REPOR exercised 10 30,463 (5,432) ––– 25,031 – 25,031 L A

U Share options lapsed – (410) –– 410 –– –

Dividends 9 – ––– (128,511) (128,511) (231) (128,742)

Balance at 31 March 2008 245,008 28,544 (88,378) 2,647 937,497 1,125,318 14,840 1,140,158 sia engineering company ANN sia engineering company

87 The notes on pages 91 to 146 form an integral part of these financial statements. Balance at31March 2007 Dividends Share optionslapsed Share optionsexercised Share-based payment Net incomeandexpense P C Balance at The Group rofit for the the for rofit urrency translation translation urrency financial year and lossaccount recognised intheprofit differences not financial year the for recognised 1 April2006 The notesonpages91to146forman integralpartofthesefinancialstatements.

Notes 05,6 (6,640) 51,461 10 11 9 1,4 791(712 1,9 9,7 3201,010,410 13,240 997,170 811,796 (47,142) 17,971 214,545 6,8 188(163 8,5 ,3,8 4101,053,057 14,170 1,038,887 885,558 (21,653) 11,898 163,084 Capital Share A – – – – – – ttributable toEquityHoldersoftheCompany compensation Share-based reserve 13,229 For thefinancialyearended31March2008(inthousandsof$) (516) – – – – – – translation currency Foreign (25,489) 2,8)22032654(7)216,108 (476) 216,584 242,073 (25,489) reserve statement ofchangesinequity – – – – – 3631 3631 44 (316,805) (454) (316,351) (316,351) General 4,7 4,7 50 241,573 (500) 242,073 242,073 eev Total reserve 516 – 2,8)2 (25,465) 24 (25,489) 44,821 13,229 – – neet Total equity interests Minority – – 44,821 13,229 – 88 sia engineering company ANNUAL REPORT 2007/08 statement of changes in equity For the financial year ended 31 March 2008 (in thousands of $)

Share-based compensation Fair value General Notes Share Capital reserve reserve reserve Total

The Company

Balance at 1 April 2006 163,084 11,898 – 718,331 893,313 Profit for the financial year Representing: Net income recognised for the financial year – – – 157,886 157,886

Share-based payment 11 – 13,229 – – 13,229

Share options exercised 10 51,461 (6,640) – – 44,821

Share options lapsed – (516) – 516 –

Dividends 9 – – – (316,351) (316,351)

Balance at 31 March 2007 214,545 17,971 – 560,382 792,898 Net fair value changes on cash flow hedges not recognised in the profit and loss account – – 2,647 – 2,647

Profit for the financial year – – – 203,125 203,125 Net income recognised for the financial year – – 2,647 203,125 205,772

Share-based payment 11 – 16,415 – – 16,415

Share options exercised 10 30,463 (5,432) – – 25,031

Share options lapsed – (410) – 410 – Dividends

T 2007/08 9 – – – (128,511) (128,511)

Balance at 31 March 2008 245,008 28,544 2,647 635,406 911,605 REPOR L A U sia engineering company ANN sia engineering company

89 The notes on pages 91 to 146 form an integral part of these financial statements. CASH ANDEQUIVALENTS AT ENDOFFINANCIALYEAR cashandbankbalances short-termdeposits ANALYSIS OFCASH ANDCASHEQUIVALENTS CASH ANDEQUIVALENTS AT ENDOFFINANCIALYEAR Effect ofexchangeratechanges CASH ANDEQUIVALENTS AT BEGINNINGOFFINANCIALYEAR NET CASHINFLOW/(OUTFLOW) NET CASHUSEDINFINANCINGACTIVITIES

repaymentofbankloan repaymentoffinanceleaseobligations interest paid p proceeds from exercise ofshare options CASH FLOWFROMFINANCINGACTIVITIES NET CASHPROVIDEBYINVESTINGACTIVITIES interest received from deposits

proceeds from capitalreduction ofassociatedcompany acquisitionofsubsidiary, netofcashacquired proceeds from disposaloffixedassets purchase ofintangibleassets capitalexpenditure CASH FLOWFROMINVESTINGACTIVITIES The notesonpages91to146forman integralpartofthesefinancialstatements. NET CASHPROVIDEBYOPERATING ACTIVITIES Dividends paidbysubsidiarycompaniestominorityinterests Dividends paid companytominorityshareholders Dividends received from jointventure companies Dividends received from associatedcompanies Dividend received from long-terminvestment roceeds from issuance of share capital by a subsidiary subsidiary a by capital share of issuance from roceeds For thefinancialyearended31March2008(inthousandsof$) consolidated cashflowstatement Notes 26 25 29 29 2007-08 (105,349) (128,511) 437,294 370,881 437,294 400,301 (58,502) 66,413 39,115 25,031 52,749 10,312 33,719 55,269 13,682 91,715 (2,122) (1,997) (1,464) (1,415) 1,146 1,148 (231) (753) The Group (34) – 2006-07 (272,262) (316,351) 400,301 369,745 400,301 500,594 145,386 (98,673) (47,132) 30,556 44,821 28,203 13,900 13,878 31,900 15,452 (1,620) (3,764) 3,855 (454) (245) 114 (33) – – – 90 sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

1. general

SIA Engineering Company Limited (the “Company”) is a limited liability company incorporated in the Republic of Singapore, which is also the place of domicile. The Company is a subsidiary company of Singapore Airlines Limited and its ultimate holding company is Temasek Holdings (Private) Limited, both incorporated in the Republic of Singapore.

The registered office of the Company is located at SIA Engineering Company Hangar, 31 Airline Road, Singapore 819831.

The principal activities of the Company are the airframe maintenance and component overhaul services, the provision of line maintenance and technical ground handling services, and investment holdings. The principal activities of the subsidiary companies include the manufacturing of aircraft cabin equipment, refurbishment of aircraft galleys, the provision of technical and non-technical handling services, repair and overhaul of hydro-mechanical aircraft equipment and investment holdings. There have been no significant changes in the nature of these activities during the financial year.

The financial statements for the financial year ended 31 March 2008 were authorised for issue in accordance with a resolution of the Board of Directors on 6 May 2008.

2. accounting Policies

The accounting policies have been consistently applied by the Group and the Company and are consistent with those used in the previous financial year.

(a) Basis of accounting

The financial statements of theG roup and of the Company, which are expressed in Singapore dollars ($), are prepared under the historical cost convention except as disclosed in the accounting policies below, and in accordance with Singapore Financial Reporting Standards (“FRS”) as required by the Singapore Companies Act, Cap. 50.

(b) Adoption of new and revised standards

in the current financial year, the Group has adopted all of the new and revised FRS and Interpretations

T 2007/08 of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after 1 January 2007. The adoption of these new/revised FRS and INT FRS does not result in changes to

REPOR the Group’s and Company’s accounting policies and has no material effect on the accounts reported for L

A the current or prior years except as disclosed below and in the notes to the financial statements. U

FRS 107 – Financial Instruments: Disclosures and amendments to FRS 1 Presentation of Financial Statements relating to capital disclosures

The Group has adopted FRS 107 with effect from annual periods beginning on or after 1 January 2007. The new Standard has resulted in an expansion of the disclosures in these financial statements regarding the Group’s financial instruments. The Group has also presented information regarding its objectives, policies and processes for managing capital (Note 33) as required by the consequential amendments to FRS 1 which are effective from annual periods beginning on or after 1 January 2007. sia engineering company ANN sia engineering company

91 (b) accountingPolicies(continued) 2. e (c)

and INTFRSthathavebeenissuedbutnotyeteffective: the statements, financial these of authorisation of date the At Adoption ofnewandrevised standards (continued) (i) the at uncertainty estimation of amounts carrying the sources to of assetsandliabilitieswithinthenextfinancialyearare discussedbelow. adjustment key material a causing other of risk and significant a have that future date, sheet the balance concerning assumptions key The are that events future of believed tobereasonable underthecircumstances. expectations including factors, relevant and experience on based are and basis on-going an on assessed are They made. disclosures and expenses, and income the liabilities, assets, of of application the affect They statements. financial Significant accountingestimates the to impact material no financial statementsintheperiodofinitialapplication. have will pronouncements above the of adoption the that expect directors The (ii) FRS 23 Revised FRS1 INT FRS114–19 INT FRS113 INT FRS112 FRS 108 stimates and assumptions concerning the future and judgements are made in the preparation of the the of preparation the in made are judgements and future the concerning assumptions and stimates h cs o pat eupet n toig ad icat oal sae ae ercae o a 31 at as on spares rotable aircraft depreciated are spares industry.overhaul the repairand of amount carrying The rotable aircraft maintenance,aircraft the and in expectancies life common are These years. 15 to 3 within be to assets lives. tooling, useful expected and the over basis equipment straight-line plant, of cost The Depreciation ofplant,equipmentandtooling,aircraft rotable spares The The Income taxes lives useful economic the impact could developments and theresidual valuesof theseassets.Therefore future depreciation charges couldberevised. technological and usage of level expected was $20,323,000(2007:$45,370,000) and$21,786,000(2007:$13,191,000)respectively. is determination such which in the of period amount carrying The the made. in provisions tax deferred and tax income the impact will differences such recognised, were initially that from the amounts is different of matters these outcome for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax G roup has exposure to income taxes in numerous jurisdictions. The The jurisdictions. numerous in taxes income to exposure has roup Borrowing Borrowing Presentation ofFinancialStatements Funding Requirements andtheirinteraction Benefit Defined a on Limit The Customer LoyaltyProgrammes Service ConcessionArrangements Operating Segments C M osts osts arch 2008 was $118,576,000 (2007: $99,036,000). $99,036,000). (2007: $118,576,000 was 2008 arch roup’s current and deferred tax payables as at 31 at as payables tax deferredGroup’s and current notes to the M A G anagement estimates the useful lives of these these of lives useful the estimates anagement sset, sset, roup’s accounting policies, reported amounts amounts reported policies, accounting roup’s Group’sandtooling, and equipment plant, roup has not applied the following FRS following the applied not has Group M inimum inimum E ffective date ( date ffective G roup recognises liabilities liabilities recognises roup beginning onorafter) 1 January2009 1 January2009 1 January2008 1 July2008 1 January2008 1 January2009 financial statements A C nnual periods periods nnual hanges in the the in hanges arch 2008 March – 31March2008

92 sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(c) Significant accounting estimates (continued)

(iii) Work-in-progress

Work-in-progress was stated at cost plus estimated profit earned, based on the estimated percentage of completion and total estimated budgeted costs. Management made reference to labour hours incurred and the physical stage of maintenance, repair and overhaul in estimating the percentage of completion and budgeted cost. The carrying amount of the Group’s work-in-progress as at 31 March 2008 was $42,526,000 (2007: $35,940,000).

(d) Consolidation

The consolidated financial statements comprise the separate financial statements of the Company and its subsidiary companies as at the balance sheet date. Consistent accounting policies are applied for like transactions and events in similar circumstances. A list of the Group’s subsidiary companies is shown in Note 16.

all intra-group balances, transactions, income and expenses, and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

acquisitions of subsidiaries are accounted for using the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any excess of the cost of the business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill on the balance sheet. The accounting policy for goodwill is set out in Note 2(f). Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of the business combination is recognised in the profit and loss account on the date of acquisition.

subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

T 2007/08 minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. They are presented in the consolidated balance sheet within equity, separately from the parent

REPOR shareholders’ equity, and are separately disclosed in the consolidated profit and loss account. L A U (e) Subsidiary, associated and joint venture companies

in the Company’s separate financial statements, investment in subsidiary, associated and joint venture companies are accounted for at cost less impairment losses.

a subsidiary company is defined as an entity over which the Group has the power to govern the financial and operating policies, generally accompanied by a shareholding giving rise to the majority of the voting rights.

an associated company is defined as an entity, not being a subsidiary company or joint venture company, in which the Group has significant influence, but not control, generally accompanied by a shareholding sia engineering company ANN sia engineering company giving rise to between and including 20% and 50% of the voting rights. A list of the Group’s associated companies is shown in Note 17. 93 (f) a (e) accountingPolicies(continued) 2. i (ii) goodwill arising from business combinations prior to 1 g (i) Intangible assets the of end the to statements accounting period. financial management unaudited and available statements financial audited the of those with co-terminous not are used the by are used companies venture joint and associated the of statements financial audited available recent most The financial statementsundertheequitymethodonsamebasisasassociatedcompanies. The control. sharing companies isshowninNote18. parties the of consent unanimous the require the to activity relating decisions operating and financial strategic the where control, joint to subject is that activity made paymentsonbehalfoftheassociatedcompany. company,the associated the When the periodinwhichinvestmentisacquired. the of part as income as recognised is and contingent liabilities over the cost of investment is deducted from the carrying amount of the investment the investment. the of amount carrying the in included is company associated an to relating cost at sheet balance the the in in changes post-acquisition plus measured is company associated in investment the method, equity the The Subsidiary, associatedandjointventure companies(continued) joint venture company is a contractual arrangement whereby two or more parties undertake an economic an economic two undertake or whereby more parties arrangement is a company contractual venture joint Group’s share of the consolidated results of the joint venture companies are included in the consolidated roup’s share of the net fair value of the associated company’s identifiable assets, liabilities and liabilities assets, identifiable company’s associated the of value fair net the of share Group’s acquired in a business combination is their fair value as at the date of acquisition. Following initial impairment losses.initial Following acquisition. of date the at as value acquisition, intangible fair assets their are is measured at combination cost business less a any in accumulated amortisation acquired and accumulated Other intangibleassets financial the if acquisition statements oftheacquired interest areof notdenominatedinSingapore dollars. date the at rate exchange the using translated are interest acquired the of liabilities and assets goodwill, determining When arose. it which in year financial the in reserves frequently ifeventsorchanges incircumstances indicatethatthecarryingvaluemaybeimpaired. losses. impairment accumulated any less assets, liabilities and the contingent liabilities. Following initial recognition, goodwill is measured at over cost combination business the of cost Goodwill roup’s investments in associated companies are accounted for using the equity method. Under method. equity the using for accounted are companies associated in investments Group’s ntangible assets acquired separately are measured initially at cost. The cost of intangible assets assets intangible of cost The cost. at initially measured are separately acquired assets ntangible oodwill acquired in a business combination is initially measured at cost being the excess of the the of excess the being cost at measured initially is combination business a in acquired oodwill G roup’s share of losses in an associated company equals or exceeds its interest in the the in interest its exceeds or equals company associated an in losses of share roup’s G roup in applying the equity method. Where the dates of the audited financial statements statements financial audited the of dates the Where method. equity the applying in roup roup does not recognise further losses, unless it has incurred obligations or obligations incurred has it unless losses, further recognise not does Group roup’s share of net assets of the associated company.associated the of assets net of Group’sshare roup’s share of profit or loss of the associated company in company associated the Group’s of loss or profit of share op te hr o rsls s rie a fo te last the from at arrived is results of share the Group, G G oodwill is reviewed for impairment, annually or more more or annually impairment, for reviewed is oodwill roup’s interest in the net fair value of the identifiable identifiable the of value fair net the in interest roup’s notes to the April 2001 has been written-off against A list of the the of list financial statements G roup’s joint venture venture joint roup’s ny excess of excess Any Goodwill Group – 31March2008 94 sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(f) Intangible assets (continued)

(ii) Other intangible assets (continued)

intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end.

intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

Computer software

computer software are stated at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised using the straight-line method over their estimated useful lives of 3 to 5 years.

Others

This includes costs relating to the development of the passenger-to-freighter conversion know-how and license acquired in business combination. Costs related to development of the passenger- to-freighter conversion know-how are capitalised and amortised on a straight-line basis over its estimated useful life of 3 years.

(g) Functional and foreign currencies

The management has determined the currency of the primary economic environment in which the Company operates i.e. functional currency, to be Singapore Dollar. Sales prices and major costs of providing goods and services including major operating expenses are primarily influenced by fluctuations in Singapore Dollar. T 2007/08 Foreign currency transactions are converted into Singapore dollars at exchange rates which approximate

REPOR bank rates prevailing at dates of transactions. L A U all foreign currency monetary assets and liabilities are translated into Singapore dollars using year-end exchange rates. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined.

gains and losses arising from translation of current assets and liabilities are taken to the profit and loss account.

For the purposes of the Group financial statements, the net assets of the foreign subsidiary, associated and joint venture companies are translated into Singapore dollars at the exchange rates ruling at the balance sheet date. The financial results of foreign subsidiary, associated and joint venture companies

sia engineering company ANN sia engineering company are translated monthly into Singapore dollars at exchange rates which approximate the exchange rates at the date of the transactions. The resulting gains or losses on exchange are taken to foreign currency 95 translation reserve. (i) (h) g after or on operations foreign of acquisition the from arising adjustments value fair and goodwill (g) accountingPolicies(continued) 2. (iv) (iii) (ii) (i) inuse. nolonger are they until depreciation ischarged afterassetsare statements depreciated totheirresidual values. financial the in retained are assets depreciated Fully as adjusted and circumstances, changing and experience of appropriate ateachbalancesheetdate. light the in annually reviewed are values costs to their estimated residual their values at write-down the end to of their calculated operational are lives. which rates at basis straight-line a on depreciated are assets Fixed Depreciation offixedassets any and statements financial the from gain orlossresulting from theirdisposalisincluded intheprofit andlossaccount. removed are depreciation accumulated and costs their retired, or expenditure for maintenance and repairs is charged to the profit and loss account. When assets are sold use. intended its for condition an asset comprises its purchase price and any directly attributable costs of bringing the asset to working ofcost The value. in impairment any and depreciation accumulated less cost at stated are assets Fixed Fixed assets Singapore dollarsattheratesprevailing atthedatesofacquisition. 1 currency oftheforeign operations,andtranslatedattheclosingratebalancesheetdate. 1 Functional andforeign currencies (continued) oodwill and fair value adjustments which arose on acquisitions of foreign subsidiaries before before subsidiaries foreign of acquisitions on arose which adjustments value fair and oodwill April 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional rl 05 r dee t b ast ad iblte o te aet opn ad r rcre in recorded are and company parent the of liabilities and assets be to deemed are 2005 April This covers office furniture and equipment, and motor vehicles. These are depreciated over 1 to 1 over 7 years. depreciated are These vehicles. motor and equipment, and furniture office covers This Other fixedassets These are depreciated over3to10years. Aircraft rotable spares These are depreciated over3to15years. is whichever years, 30 or period Plant, equipmentandtooling lease the over amortised are the shorter. buildings and land Leasehold Leasehold landandbuildings xpenditure for additions, improvements and renewal is capitalised and capitalised is renewal and improvements additions, for Expenditure notes to the Operational lives and residual financial statements No – 31March2008

96 sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(j) Leased assets

(i) Finance lease – as lessee

Finance leases, which effectively transfer to the Group substantially all the risks and benefits incidental to ownership of the leased asset, are capitalised at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments at the inception of the lease term and disclosed as leased fixed assets and the corresponding lease commitments are included under liabilities. Lease payments are apportioned between finance charges and reduction of the lease liability so asto achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against the profit and loss accounts. Depreciation on the relevant assets is charged to the profit and loss accounts.

(ii) Operating lease – as lessee

Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases.O perating lease payments are recognised as an expense in the profit and loss accounts on a straight-line basis over the lease term.

(k) Stocks

stocks are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.

(l) Work-in-progress

Work-in-progress is stated at cost plus a proportion of estimated profit earned to-date, based on the percentage of completion of the projects. Cost comprises direct materials, direct labour and other direct overheads. Anticipated losses, if any, are provided for in full as and when they are determined.

(m) Financial assets

T 2007/08 Financial assets within the scope of FRS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale assets, as

REPOR appropriate. Financial assets are recognised on the balance sheet when the Group becomes a party to L A

U the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, and in the case of financial assets not at fair value through profit or loss at directly attributable transaction costs. TheG roup determines the classifications of its financial assets after initial recognition, and where allowed and appropriate, re-evaluates this designation at each financial year-end.

all regular way purchases and sales of financial assets are recognised on the trade date. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. sia engineering company ANN sia engineering company

97 s (n) (m) accountingPolicies(continued) 2. interest method,exceptforderivatives,whichare measured atfairvalue. derivatives, directly attributable transactioncosts. than other liabilities financial of case the in plus, value, fair at initially recognisedare liabilities Financial to thecontractualprovisions ofthefinancialinstrument. the when, only and when, sheet balance the on recognised are liabilities Financial Financial liabilities a (iii) n (ii) (i) Financial assets(continued) ubsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective effective the using cost amortised at measured are liabilities financial all recognition, initial to ubsequent and where fairvaluecannot bereliably measured, theyare measured atcostlessimpairmentloss. techniques. valuation another instrument of(which using is value substantially the market same). currentFor investments the where determined thereto is reference no or active is where market transactions market length value arm’sinvestments recent using For fair include date. market, sheet active balance the no on is business there the of close the at prices bid market The fair value of quoted investments is generally determined by reference to stock exchange quoted cumulative gainorlosspreviously reported inequity isincludedintheprofit andlossaccounts. the investment is derecognised or until the investment is determined to be impaired at which time the reservevalue untilfair recognisedthe being in losses or gains with arevalue assets measuredfair at categories. other any in classified not or category, Available-for-sale financialassets debtors isstatedinNote2(q). R process. amortisation the through as well as impaired, or derecognised are receivables and loans method. interest effective receivables. and loans as classified are market Loans andreceivables 12 monthsafterthebalancesheetdate. account. loss and profit are classified asthe current assetsin if they are either held for trading orrecognised are expectedare to be realised within loss and profit through value derivatives. hedging as unless designated category are this they under classified also are Derivatives term. short the in selling of purpose the for value fair as designated those and inception. trading, at loss or profit for through held assets financial sub-categories: two are There Financial assetsatfairvaluethrough profit orloss vailable-for-sale financial assets are non-derivatives financial assets that are either designated in this eceivables are included in trade debtors on the balance sheet. The accounting policy for trade trade for policy accounting The sheet. balance the on debtors trade in included are eceivables on-derivative financial assets with fixed or determinable payments that are not quoted in an active active an in quoted not are that payments determinable or fixed with assets financial on-derivative ains and losses are recognised in profit and loss accounts when the when accounts loss and profit in recognised are losses and Gains A financial asset is classified in this category if acquired principally principally acquired if category this in classified is asset financial is r oss n iaca isrmns ed at fair held instruments financial on losses or Gains S uch assets are carried at amortised cost using the the using cost amortised at carried are assets uch notes to the A fter initial recognition, available-for-sale financial financial available-for-sale recognition, initial fter financial statements G A roup becomes a party a party becomes roup ssets in this category category this in ssets S uch techniques techniques uch – 31March2008

98 sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(o) Derecognition of financial assets and liabilities

(i) Financial assets

a financial asset is derecognised where the contractual rights to receive cash flows from the asset have expired.

on derecognition of a financial asset, the difference between the carrying amount and the sum of (a) the consideration received and (b) any cumulative gain or loss that has been recognised directly in equity is recognised in the profit and loss account.

(ii) Financial liabilities

a financial liability is derecognised when the obligation under the liability is extinguished. For financial liabilities other than derivatives, gains and losses are recognised in the profit and loss account when the liabilities are derecognised or impaired, and through the amortisation process. Any gains or losses arising from changes in fair value of derivatives are recognised in the profit and loss account. Net gains or losses on derivatives include exchange differences.

(p) Long-term investment

Long-term investment held by the Group is classified as available-for-sale. As there is no active market for the trading of this investment and fair value cannot be reliably measured, this investment is stated at cost. The accounting policy for this category of financial assets is stated in Note 2(m).

(q) Loans and receivables

Trade debtors, including amounts owing by subsidiary, associated and joint venture companies and other debtors are classified and accounted for as loans and receivables under FRS 39. The accounting policy for this category of financial assets is stated in Note 2(m).

Further details on the accounting policy for impairment of financial assets are stated in Note 2(ac).

(r) Cash and bank balances

T 2007/08 cash and bank balances are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes REPOR

L in value. A U cash on hand, demand deposits and short-term deposits are classified and accounted for as loans and receivables under FRS 39.

For the purposes of the Consolidated Cash Flow Statement, cash and cash equivalents consist of cash on hand and deposits with immediate holding company and banks. The accounting policy for this category of financial assets is stated in Note 2(m). sia engineering company ANN sia engineering company

99 (u) (t)

(s) accountingPolicies(continued) 2.

(i) Employee benefits less received subsequently measured at amortisedcostusingtheeffective interest method. consideration the of costs. value fair transaction the at attributable directly recognised initially are borrowings other and Loans Loans andborrowings (ii) amount the at measured are periods prior and current the for liabilities and assets tax current (i) taxes Income o gatn o sae pin t sno eeuie ad l ohr mlye. h eecs price exercise The employees. other all and executives approximates themarketvalueofshares atthedateofgrant. senior to options share of granting for The Equity compensationplans business a from arising tax deferred and equity in combination isadjustedagainstgoodwillonconsolidation. directly recognised is directly to taxrelating recognised that deferred items except account loss and profit the in recognised are taxes Deferred have that laws tax and rates tax on the to based apply settled, to been enactedorsubstantivelyatthebalancesheetdate. is liability expected the are or that realised rates is tax asset the the when at year measured are liabilities and assets tax Deferred In • Where • Deferred taxassetsandliabilitiesare recognised foralltemporarydifferences, except: financial for balance amounts the carrying at their and differences liabilities temporary and reporting purposes. assets all of on bases tax method, the between liability date the sheet using provided, is tax Deferred laws Deferred taxation tax balance and the by rates enacted tax The substantively or enacted authorities. are that sheet date. taxation those the are to amount the paid compute or to used from recovered be to expected Current taxation In • differences andcarryforward ofunusedtaxcredits andunusedtaxlossescanbeutilised. losses, if it is not probable that taxable profitwill be availableagainst which the temporary deductible future; and the by venture companies, where the timing of the reversal of the temporary differences can be controlled profit nortaxableprofit orloss; accounting the neither affects transaction the of time the at and, combination business a not is may a i pae the place in has Company respect respect the G roup and it is probable that the temporary differences will not reverse in the foreseeable foreseeable the in reverse not will differences temporary the that probable is it and roup of of deferred deductible temporary tax temporary arises differences from SIA A fter initial recognition, interest-bearing loans and borrowings are are borrowings and loans interest-bearing recognition, initial fter differences the Engineering associated initial recognition and with notes to the may Limited Company carry investments forward of an asset of in unused subsidiary, Employee or liability tax financial statements credits associated in Share a transaction and Option unused and Plan joint that tax – 31March2008

100

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(u) Employee benefits (continued)

(i) Equity compensation plans (continued)

The Company has also implemented the Restricted Share Plan and Performance Share Plan for awarding of fully paid ordinary shares to key senior management and senior executives, when and after pre-determined performance or service conditions are accomplished.

Details of the plans are disclosed in Note 10.

Equity-settled transactions

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which the share options are granted. In valuing the share options, no account is taken of any performance conditions, other than conditions linked to the price of the shares of the Company.

The cost of equity-settled transactions is recognised, together with a corresponding increase in the share-based compensation reserve, over the period in which the service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and theG roup’s best estimate of the number of equity instruments that will ultimately vest.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not recognised for the award is recognised immediately.

The share-based compensation reserve is transferred to general reserve upon cancellation or expiry of the vested options or awards. When the options are exercised or awards are released, the share-based compensation reserve is transferred to share capital if new shares are issued.

(ii) Defined contribution plan

as required by law, the companies in Singapore make contributions to the state pension scheme, the Central Provident Fund (“CPF”). One of the Group’s subsidiary companies outside Singapore makes

T 2007/08 contributions to its respective country’s pension schemes. Such contributions are recognised as compensation expenses in the same period as the employment that gave rise to the contributions. REPOR L

A (iii) Defined benefit plan U The Group contributes to an unfunded, non-contributory, defined benefit pension plan for most of the regular employees employed in its overseas subsidiary. The cost of providing benefits includes the Group’s contribution for the year plus any unfunded liabilities under the plan. Contributions to the plan over the expected average remaining working lives of the employees participating in the plans are expensed as incurred.

(v) Trade creditors

Trade creditors and amounts owing to subsidiary, associated and joint venture companies are initially

sia engineering company ANN sia engineering company recognised at fair value and subsequently measured at amortised cost using the effective interest method.

gains and losses are recognised in the profit and loss accounts when the liabilities are derecognised as 101 well as through the amortisation process. provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. the when recognisedare provisions (w) accountingPolicies(continued) 2. (ab) (aa) interest income from investments and fixed deposits is recorded using the effective interest rate method (z) r revenuefrom linemaintenanceandtechnicalground handlingisrecognised uponrendering ofservices. of percentage the on based recognised is overhaul component and maintenance airframe from revenue (y) p (x) provision for warranty claims is made for airframe maintenance and component overhaul services based provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the the when only but asset account netofanyreimbursement. separate loss and a profit the in presented is as provision any to relating recognised expense The certain. is virtually is reimbursement reimbursement the reimbursed, the be Where to reliably. estimated provision be can obligation the of amount the and a past event, it is probable that an outflow of economic resources will be required to settle the obligation Provisions Borrowing costsare recognised asexpensesinthe financialperiodinwhichtheyare incurred. Borrowing costs loss and profit the to charged are costs, program accounts inthefinancialyearwhichtheyare incurred. start-up including costs, development and Training Training anddevelopmentcosts and recognised onanaccrual basis. the when recognised is established. is investments from income Dividend Income from investments with theperiodinwhichserviceshavebeenrendered. the on based determined is projects the of completion of number ofman-hoursincurred to-dateagainsttheestimatedman-hoursneeded tocompletetheprojects. percentage The projects. the of completion Revenue directly attributabletotheissuanceofordinary shares are deductedagainstshare capital. Share capital on pastexperienceofthelevelrepairs. is used,theincrease intheprovision duetothepassage oftimeisrecognised asafinancecost. a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. the Where discounting obligation, the settle to required provision be is reversed. will resources economic of outflow an that probable longer no is roceeds from issuance of ordinary shares are recognised as share capital in equity. equity. in capital share as recognised are shares ordinary of issuance from roceeds evenue from Fleet from Fleet evenue M anagement anagement If the effect of the time value of money is material, provisions are discounted using P rogrammes is recognised on a time proportion basis and in accordance and in basis accordance on a proportion time is recognised rogrammes roup has a present obligation (legal or constructive) as a result ofresult a as constructive) or (legal obligation present a has Group notes to the ops ih t rcie h payment the receive to right Group’s G roup expects some or all of a of all or some expects roup financial statements I ncremental costs costs ncremental If it – 31March2008

102

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(ac) Impairment of non-financial and financial assets

The carrying amounts of the Group’s non-financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is charged to the profit and loss accounts unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. An impairment loss is reversed if there has been a change in estimates used to determine the recoverable amount.

The Group also assesses at each balance sheet date whether a financial asset or a group of financial assets is impaired.

(i) Assets carried at amortised costs

if there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced either directly or through the use of an allowance account. The impairment loss is recognised in the profit and loss account.

When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset.

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously

T 2007/08 recognised impairment is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the profit and

REPOR loss account. L A U (ii) Assets carried at costs

if there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. sia engineering company ANN sia engineering company

103 a a s (ad) (ac) accountingPolicies(continued) 2. h fi vle f owr crec cnrcs s eemnd y eeec t cret owr pie for prices forward current to contracts withsimilarmaturityprofiles. reference by determined is contracts currency forward of value fair The accounting are takendirectly totheprofit andlossaccounts. when thefairvalueispositive,andasliabilitiesnegative. contract is entered into, and are subsequently re-measured at fair value. Derivatives are carried as assets associated withforeign currency fluctuations. (i) Hedges whichmeetthecriteriaforhedgeaccounting are accountedforasfollows: for whichtheyare designated. periods reporting financial the throughout effective highly been have they that determine to basis ongoing an on assessed are and value, fair or flows cash in changes offsetting achieving in effective highly be hedgedrisk. the to values or fair attributable flows cash (ortransaction’s) item’s hedged assess the will in entity changes the to exposure how the and offsetting in hedged effectiveness instrument’sbeing hedging risk the the of nature the instrument, hedging the transaction, and strategy for undertaking the hedge. The documentation includes identification of the hedged item or the which to relationship The Derivative financialinstrumentsandhedging available-for-salean if differencethe (netcomprising cost impaired,amount its is an between asset significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or (iii) Impairment ofnon-financialandfinancialassets(continued) t the inception of a hedge relationship, the the relationship, hedge a of inception the t hedge for qualify not do that derivatives on value fair in changes from arising losses or gains ny aderivative which on date the on value fair at recognised initially are instruments financial derivative uch loss account. directly in the fair value reserve (Note 11), while the ineffective portion is recognised in the profit and For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised Cash flowhedges to aneventoccurringaftertheimpairmentlosswasrecognised intheprofit andlossaccount. objectively related be can instrument debt the of value fair increase in the if account loss profit and account. loss and profit loss impairment loss and any profit the to less equity account. from value, transferred is fair account, loss current and profit its the in and recognised previously amortisation) and repayment principal any of assets financial are impaired. available-for-sale as classified securities investment that evidence objective is there obligor, and the disappearance of an active trading market are considerations to determine whether Available-for-sale financialassets G roup uses derivative financial instruments such as forward currency contracts to hedge its risks risks its hedge to contracts currency forward as such instruments financial derivative uses roup R eversals of impairment losses in respect of equity instruments are not recognised in the the in recognised not are instruments equity of respect in losses impairment of eversals G roup wishes to apply hedge accounting and the risk management objective objective management risk the and accounting hedge apply to wishes roup R eversals of impairment losses on debt instruments are reversed through the through are reversed instruments on debt losses of impairment eversals G roup formally designates and documents the hedge hedge the documents and designates formally roup notes to the c hde ae xetd to expected are hedges Such financial statements – 31March2008 104

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

2. accounting Policies (continued)

(ad) Derivative financial instruments and hedging (continued)

(i) Cash flow hedges (continued)

amounts taken to the fair value reserve are transferred to the profit and loss account when the hedged transaction affects profit or loss, such as when a forecast sale or purchase occurs. If the hedged item is the cost of a non-financial asset or liability, the amounts taken to the fair value reserve are transferred to the initial carrying amount of the non-financial asset or liability.

(ae) Segmental Reporting

The Company and its subsidiary companies operate in Singapore, Philippines and Australia in one business segment, that of maintenance, repair and overhaul of aircraft and aircraft engines.

3. revenue (in thousands of $)

The Group 2007-08 2006-07

Airframe maintenance and component overhaul services 603,064 591,770 Line maintenance and technical ground handling 335,385 309,552 Fleet management programmes 71,123 76,054 1,009,572 977,376

4. staff Costs (in thousands of $)

The Group 2007-08 2006-07

Salary, bonuses and other costs 395,144 380,382 CPF and other defined contributions 28,445 24,585 T 2007/08 Share-based compensation expense 16,393 13,194 439,982 418,161 REPOR L A

U The Group contributes to an unfunded, non-contributory, defined benefit pension plan for most of the regular employees employed under its overseas subsidiary. Defined benefit expenses for theG roup were approximately $93,000 for 2007-08 and $55,000 for 2006-07. As these are not material to the total staff costs of the Group for 2007-08 and 2006-07, additional disclosures of the defined benefit plan are not shown. Disclosures relating to share-based compensation expense are in Note 10. sia engineering company ANN sia engineering company

105 Remuneration forauditorsoftheCompany Professional feepaidtoafirminwhichdirector isamember Write-back ofwarrantyclaims,net Provision forobsoletestocks,net Operating leaseexpenses interestIncome(inthousandsof$) 6. # Amountincludesafairvaluegainonforward currency contractsof$5,187,000(2006-07:$829,000). Operating profit forthefinancialyearisarrivedataftercharging /(crediting): operating Profit(inthousandsof$) 5. Provision forthefinancial year Deferred taxation C t 7. Staff loans Deposits placedwithbanks Deposits placedwithimmediateholdingcompany Exchange (gain)/losses,net (Under) /Overprovision inrespect ofprioryears Share ofassociatedcompanies’ taxation Over provision inrespect ofprioryears Provision forthefinancial year Adjustment forreduction in Singapore statutorytaxrate Share ofjointventure companies’taxation urrent taxation - Non-auditfees - Auditfees axation (inthousandsof$) # notes to the financial statements 2007-08 2007-08 2007-08 (21,993) (22,637) (31,232) (7,029) (1,566) (9,449) (8,595) 9,796 1,215 8,527 8,874 (785) (254) The Group The Group The Group 914 841 176 198 (69) 54 5 – 2006-07 2006-07 2006-07 (22,681) (31,039) (29,388) 13,676 11,719 (1,063) (8,790) 2,950 1,853 1,651 1,425 185 204 196 104 444 273 (47) (12) 25 53 – 31March2008 106

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

7. taxation (in thousands of $) (continued)

On 3 December 2003, the Company was granted a 10-year Development and Expansion Incentive (Relief from Income Tax), subject to the Company’s compliance with the conditions imposed by the relevant authorities. This Development and Expansion Incentive (DEI) has been terminated after 31 May 2005 and a new 10-year DEI has been awarded, commencing on 1 June 2005, whereby a concessionary tax rate of 5% shall be imposed on qualifying income in excess of a certain ‘base’ level of taxable income. The base, as well as any income from non-qualifying activities, shall be taxed at the prevailing corporate tax rate.

On 15 February 2007, the Government announced a 2% points cut in statutory tax rate from Year of Assessment 2008. The financial effect of the reduction in tax rate was reflected in the 2006-07 accounts. The aggregate adjustment of the prior year’s deferred tax liabilities was $1.4 million for the Group.

A reconciliation between taxation expense and the product of accounting profit multiplied by the applicable tax rate for the financial years ended 31 March is as follows:

The Group 2007-08 2006-07

Profit before taxation 285,569 270,961

Taxation at statutory tax rate of 18.0% (2007: 18%) (51,402) (48,773) Adjustments Income not subject to tax 24,313 18,611 Income subject to a lower tax rate – 1,973 Effect of change in statutory tax rate – 1,425 Deferred tax assets not recognised (455) – Expenses not deductible for tax purposes (7,820) (3,514) Higher effective tax rates of other countries (92) (77) Over provision in relation to prior years 7,308 717 Provision for withholding tax expense on share of associated companies’ profits (3,319) – Others 235 250

T 2007/08 Taxation (31,232) (29,388) REPOR L A U sia engineering company ANN sia engineering company

107 The directors propose a final tax exempt one-tier ordinary dividend of 16.0 cents per share (2006-07: final final $171,891,000 approximately (2006-07: to share amounting per share), (2006-07: $85,586,000)to be paidforthefinancialyearended31March per 2008. cents cents 16.0 8.0 of of dividend dividend ordinary ordinary one-tier exempt one-tier tax exempt tax final a propose directors The Interim dividendof4.0centspershare taxexemptone-tier Final dividendof8.0centspershare taxexemptone-tierinrespect Dividends Paid: 9. employee existing the under employees to anti-dilutive forthecurrent andprevious financial periodpresented. granted options are they because share per earnings diluted of share calculation the in included been not have of plans option share 15,072,400) (2006-07: 15,319,400 issue isadjustedtotakeintoaccounttheeffects ofdilutiveoptions. in shares ordinary of number average weighted the share, per earnings diluted calculating of purposes For weighted the by holders average numberofordinary shares inissueduring thefinancialyear. equity to attributable profit the dividing by calculated is share per earnings Basic pershareDiluted earnings (cents) pershareBasic earnings (cents) Weighted averagenumberofordinary shares inissueusedfor Adjustment forshare options Weighted averagenumberofordinary shares inissueusedfor Profit attributabletoequityholdersoftheCompany(inthousands$) earningsPerShare 8. (2006-07: 4.0centspershare taxexemptone-tierinrespect of2006-07) in respect ofcurrent financialyear 20.0 centspershare inrespect of2005-06) ordinary dividendof6.0cents pershare andaspecialdividendof (2006-07: 26.0centspershare taxexemptone-tier, comprisingan 2006-07 of per sharecomputing dilutedearnings per sharecomputing basicearnings Dividens P aid anPropose(inthousandsof$)

notes to the

1,087,565,753 1,070,290,814 2007-08 2007-08 17,274,939 The Group andCompany 128,511 253,802 42,925 85,586 financial statements 23.3 23.7 The Group 1,075,028,253 1,053,684,896 2006-07 2006-07 21,343,357 316,351 242,073 274,069 42,282 22.5 23.0 – 31March2008

108

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

10. share Capital (in thousands of $)

The Group and Company 31 March 2008 2007

Issued and fully paid Balance at 1 April 1,061,891,812 shares (2007: 1,036,801,075 shares) 214,545 163,084 12,423,925 share options exercised during the year (2006-07: 25,090,737) 30,463 51,461 Balance at 31 March 1,074,315,737 shares (2007: 1,061,891,812 shares) 245,008 214,545

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.

During the financial year, the Company issued 12,423,925 shares (2007: 25,090,737) upon exercise of options granted under the Employee Share Option Plan.

(a) Share Option Plan

The SIA Engineering Company Limited Employee Share Option Plan (“ESOP”), which comprises the Senior Executive Share Option Scheme and the Employee Share Option Scheme for senior executives and all other employees respectively, was approved by shareholders on 9 February 2000.

Under the Plan, all options to be issued will have a term no longer than 10 years from the date of grant. The exercise price of the option will be the average of the closing prices of the Company’s ordinary shares on the SGX-ST for the five market days immediately preceding the date of grant.

Under the Employee Share Option Scheme, options will vest two years after the date of grant. Under the Senior Executive Share Option Scheme, options will vest:

T 2007/08 (i) one year after the date of grant for 25% of the ordinary shares subject to the options;

(ii) two years after the date of grant for an additional 25% of the ordinary shares subject to the options; REPOR L A

U (iii) three years after the date of grant for an additional 25% of the ordinary shares subject to the options; and

(iv) four years after the date of grant for the remaining 25% of the ordinary shares subject to the options.

There are no cash settlement alternatives. sia engineering company ANN sia engineering company

109 informationwithrespect tothenumberofoptionsgrantedunderPlanisasfollows: (a) shareCapital (inthousandsof$)(continued) 10.

Share OptionPlan(continued) Outstanding at1April * Share priceatdateofgrant ($) Exercise price($) Expected lifeofoptions(years) Risk-free interest rate(%) Expected volatility(%) Expected dividendyield(%) Granted Outstanding at31March Cancelled Exercised Exercisable at31March were granted.ThefollowingtableliststheinputstomodelusedforJuly2007 andJuly2006grants: measured based on a binomial model, taking into account the terms and conditions upon which the shareoptionstheundergrantedyearofeach The fair value of services received in return for share options granted are measured by reference to the fair value Fair valuesofESOP The weightedaverageshare priceforoptionsexercised duringtheyearwas$4.47(2006-07:$3.91). $4.67 The weightedaveragefairvalueofoptionsgrantedduringtheyearwas$0.93(2006-07:$1.22). - $1.01 was year the of years 7.41 is end options these (2006-07: 7.49years). for the life contractual at remaining outstanding average weighted The options $3.44). - $1.01 for (2006-07: prices exercise of range The t the extraordinary general meeting of the of Ameeting general extraordinary the t exercise pricesaftersuchadjustments. by the the by said 26 July 2004, the said declaration of a special dividend. Following approval by the the by approval Following dividend. special a of declaration P lan to allow for adjustment to the exercise prices of the existing options by the the by options existing the of prices exercise the to adjustment for allow to lan C ommittee approved another $0.20 reduction in the exercise prices of the share options outstanding on 25 July 2006 following approval approval following 2006 July 25 on outstanding options share the of prices exercise the in reduction $0.20 another approved ommittee C ompany’s shareholders of the declaration of a special dividend of $0.20 on 21 July 2006. The exercise prices reflected here are the the are here reflected prices exercise The 2006. July 21 on $0.20 of dividend special a of declaration the of shareholders ompany’s Committee approved a reduction of $0.20 in the exercise prices of the share options outstanding on 28 July 2004. The Number ofoptions 1,2,2)$2.01 (12,423,925) 97128$2.40 49,731,288 54300$4.67 15,483,000 20478$3.16 52,004,788 04418$1.92 20,424,138 ompany held on 26 July 2004, the 2004, July 26 on held Company 7555 $2.92 (785,575) 2007-08 ESOP C Management’s forecast inlinewithdividend policy Weighted average average Weighted ompany’s shareholders of the declaration of a special dividend of $0.20 on on $0.20 of dividend special a of declaration the of shareholders ompany’s July 2007Grant 23.13 -24.83 . The estimate of the fair value of the servicesthereceived ofvalueisfair theestimate The of . exercise price 2.60 -2.76 5.5 -7.0 4.64 4.67 notes to the ompany’s shareholders approved an amendment to the to amendment an approved Company’sshareholders C ommittee administering the the administering ommittee Number ofoptions 2,9,3)$1.65 (25,090,737) 02555$1.82 60,225,575 52480$3.44 15,244,800 97128$2.40 49,731,288 78678$1.71 17,836,788 6830 $2.27 (648,350) financial statements July 2006Grant 2006-07 25.06 -25.36 3.37 -3.45 5.5 -7.0 3.44 P 3.96 Weighted average average Weighted lan, in the event of the the of event the in lan, exercise price * ESOP options – 31March2008

110

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

10. share Capital (in thousands of $) (continued)

(a) Share Option Plan (continued)

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options were incorporated into the measurement of fair value.

proceeds received from share options exercised during the financial year were:

2007-08 2006-07

Aggregate proceeds from shares issued (In thousands of $) 25,031 44,821

Details of share options granted during the financial year:

2007-08 2006-07

Expiry date 01.07.2017 02.07.2016

Exercise price $4.67 $3.44*

* At the extraordinary general meeting of the Company held on 26 July 2004, the Company’s shareholders approved an amendment to the Plan to allow for adjustment to the exercise prices of the existing options by the Committee administering the Plan, in the event of the declaration of a special dividend. Following approval by the Company’s shareholders of the declaration of a special dividend of $0.20 on 26 July 2004, the said Committee approved a reduction of $0.20 in the exercise prices of the share options outstanding on 28 July 2004. The said Committee approved another $0.20 reduction in the exercise prices of the share options outstanding on 25 July 2006 following approval by the Company’s shareholders of the declaration of a special dividend of $0.20 on 21 July 2006. The exercise prices reflected here are the exercise prices after such adjustments.

Terms of share options outstanding as at 31 March 2008:

Exercisable period Exercise price ($) Number outstanding Number exercisable

28.03.2001 - 27.03.2010 1.65 51,175 51,175

T 2007/08 28.03.2002 - 27.03.2010 1.65 1,307,975 1,307,975 28.03.2003 - 27.03.2010 1.65 54,675 54,675 REPOR

L 28.03.2004 - 27.03.2010 1.65 55,675 55,675 A U 03.07.2001 - 02.07.2010 1.55 98,199 98,199 03.07.2002 - 02.07.2010 1.55 1,061,801 1,061,801 03.07.2003 - 02.07.2010 1.55 163,505 163,505 03.07.2004 - 02.07.2010 1.55 163,508 163,508 sia engineering company ANN sia engineering company

111 (a) shareCapital (inthousandsof$)(continued) 10. Share OptionPlan(continued) Total numberofoptions outstanding/exercisable 02.07.2011 –01.07.2017 02.07.2010 –01.07.2017 02.07.2009 –01.07.2017 02.07.2008 –01.07.2017 03.07.2010 -02.07.2016 03.07.2009 -02.07.2016 03.07.2008 -02.07.2016 03.07.2007 -02.07.2016 01.07.2009 -30.06.2015 01.07.2008 -30.06.2015 01.07.2007 -30.06.2015 01.07.2006 -30.06.2015 01.07.2008 -30.06.2014 01.07.2007 -30.06.2014 01.07.2006 -30.06.2014 01.07.2005 -30.06.2014 01.07.2007 -30.06.2013 01.07.2006 -30.06.2013 01.07.2005 -30.06.2013 01.07.2004 -30.06.2013 01.07.2006 -30.06.2012 01.07.2005 -30.06.2012 01.07.2004 -30.06.2012 01.07.2003 -30.06.2012 02.07.2005 -01.07.2011 02.07.2004 -01.07.2011 02.07.2003 -01.07.2011 02.07.2002 -01.07.2011 E @ xercisable period

(ii) redundancy; or (iii) any other reason approved in writing by the the have by who writing in approved employees reason by other any exercised (iii) or not redundancy; (ii) options share 3,893,225) (2006-07: 3,849,875 the by employed be to includes ceased retiredor outstanding options of number total The applicable exercise periodortheof5yearsfrom thedateofretirement orcessationofemployment,whicheverisearlier. ompany or any of the subsidiary companies by reason of (i) ill health, injury or disability or death; or disability or injury health, ill (i) of reason by companies subsidiary the of any or Company Exercise price($) 4.67 4.67 4.67 4.67 3.44 3.44 3.44 3.44 2.25 2.25 2.25 2.25 1.69 1.69 1.69 1.69 1.35 1.35 1.35 1.35 1.98 1.98 1.98 1.98 1.01 1.01 1.01 1.01 C ommittee. The said options are exercisable up to the expiration of the the of expiration the to up exercisable are options said The ommittee. notes to the Number outstanding 14,353,250 13,555,025 20478@20,424,138 52,004,788 @ 6,777,125 2,952,475 3,016,975 322,050 322,050 322,050 421,425 421,425 384,675 641,125 641,125 491,500 581,125 418,000 337,625 164,875 138,700 798,950 454,050 426,950 296,375 524,650 89,750 79,200 72,500 43,250 financial statements Number exercisable 6,777,125 2,952,475 3,016,975 384,675 491,500 418,000 337,625 164,875 138,700 798,950 454,050 426,950 296,375 524,650 89,750 79,200 72,500 43,250 – – – – – – – – – – – 31March2008 112

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

10. share Capital (in thousands of $) (continued)

(a) Share Option Plan (continued)

Details of share options exercised:

No. of shares Exercise price* Share price 2007-08 April to June 1,099,125 $1.01-$2.25 $4.30-$4.84 July to September 9,678,400 $1.01-$3.44 $4.40-$4.96 October to December 867,600 $1.01-$2.25 $4.30-$4.82 January to March 778,800 $1.01-$2.25 $3.54-$4.47 12,423,925 2006-07 April to June 5,579,125 $1.21-$2.45 $3.12-$3.76 July to September 13,931,600 $1.01-$2.45 $3.52-$3.96 October to December 2,792,737 $1.01-$2.25 $3.62-$4.32 January to March 2,787,275 $1.01-$2.25 $4.12-$4.90 25,090,737

* At the extraordinary general meeting of the Company held on 26 July 2004, the Company’s shareholders approved an amendment to the Plan to allow for adjustment to the exercise prices of the existing options by the Committee administering the Plan, in the event of the declaration of a special dividend. Following approval by the Company’s shareholders of the declaration of a special dividend of $0.20 on 26 July 2004, the said Committee approved a reduction of $0.20 in the exercise prices of the share options outstanding on 28 July 2004. The said Committee approved another $0.20 reduction in the exercise prices of the share options outstanding on 25 July 2006 following approval by the Company’s shareholders of the declaration of a special dividend of $0.20 on 21 July 2006. The exercise prices reflected here are the exercise prices after such adjustments.

(b) Share-based incentive plans

The Restricted Share Plan (‘RSP”) and Performance Share Plan (“PSP”) are share-based incentive plans approved by the shareholders of the Company on 25 July 2005.

The details of the two plans are described below:

T 2007/08 RSP PSP REPOR

L Plan Description Award of fully-paid ordinary shares of Award of fully-paid ordinary shares A

U the Company, conditional on position of the Company, conditional on and individual performance targets performance targets set at the set at the start of a two-year start of a three-year overlapping performance period based on performance period based on medium-term Company objectives stretched long-term corporate with some degree of stretch. objectives for senior management.

Performance conditions • EBITDA# Margin • Absolute Total Shareholder Return (TSR) outperform Cost of • Value Added per $ Employment Cost Equity (COE) sia engineering company ANN sia engineering company • Return on Equity (ROE) 113 (b) shareCapital (inthousandsof$)(continued) 10. Payout The followingtableliststheinputstomodelusedforJuly2007and2006award: of returns. volatilityshareand including price variables random key of distributions statistical futureusing outcomes received is measured based on a prospective the under year each granted shares of sharesfor awardedmeasuredreceivedreferencereturn valueis services by in fair of the value to fair The Fair valuesofRSPandPSP Share-based incentiveplans(continued) # E beforeBITDA denotesEarnings nterest, Taxes, Depreciation andAmortisation Vesting Condition Share priceatdateofgrant ($) Expected term(years) Risk-free interest rate(%) Expected volatility(%) Expected dividendyield(%) 0% - 120% depending on the the on performance depending targets overtheperformanceperiod. pre-set of 120% achievement - 0% Balance will vest equally over the the of servicerequirements. over fulfilment vest. with equally years two will subsequent vest award will of Balance 50% period, over a performance two-year conditions performance stated meeting on Based 90 04 91 68 23 17.49 16.82-22.31 19.16 19.05 –20.43 SIAEC 2.00 –4.00 2.39 –2.54 RSP RSP Management’s forecast inlinewithdividendpolicy July 2007A

Monte RSP 4.64 and and Carlo simulation model, which involves projection of notes to the PSP ward . The estimate of the fair value of the services services the of value fair the of estimate The . PSP 4.64 2.99-3.25 3.00 2.48

% 10 dpnig n the on targets overtheperformanceperiod. depending performance pre-set of 150% achievement - 0% a over three-year performanceperiod. conditions performance Vesting

1.75 - 3.75 3.75 - 1.75 based RSP July 2006A financial statements 3.96

PSP on

meeting ward PSP

3.96 2.75 3.16 stated – 31March2008

114

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

10. share Capital (in thousands of $) (continued)

(b) Share-based incentive plans (continued)

For non-market conditions, achievement factors have been estimated based on inputs from the Compensation and Human Resource Committee for the purpose of accrual for the RSP and PSP until the achievement of the targets can be accurately ascertained.

The details of the shares awarded under RSP and PSP are as follows:

rsp Number of Restricted shares Balance at 1.4.2007/ Shares Cancelled Shares Released Balance at Date of grant date of grant during financial year during financial year 31.3.2008

03.07.2006 203,200 (8,300) – 194,900 02.07.2007 339,600 (1,300) – 338,300 542,800 (9,600) – 533,200

Based on the Monte Carlo simulation model, the estimated fair value at date of grant for each share granted under the RSP ranges from $4.19 to $4.38 (2006-07: $3.71 to $3.84).

psp Number of Performance shares Balance at 1.4.2007/ Shares Cancelled Shares Released Balance at Date of grant date of grant during financial year during financial year 31.3.2008

03.07.2006 36,900 (5,800) – 31,100 02.07.2007 61,200 – – 61,200 98,100 (5,800) – 92,300

The estimated fair value at date of grant for each share granted under the PSP is $3.53 (2006-07: $4.04).

as described in FRS 102, when estimating the fair value of the compensation cost, market-based performance conditions shall be taken into account. Therefore, for performance share grants with

T 2007/08 market-based performance conditions, the compensation cost shall be charged to the profit and loss account on a basis that fairly reflects the manner in which the benefits will accrue to the employee

REPOR under the plan over the remaining service period from date of grant to which the performance period L A

U relates, irrespective of whether this performance condition is satisfied.

For performance share grants with non-market conditions, the Company revises its estimates of the number of share grants expected to vest and corresponding adjustments are made to the profit and loss account and share-based compensation reserve.

Under the new plans, eligible key executives are required to hold a portion of the shares released to them under a share ownership guideline which requires them to maintain a beneficial ownership stake in the Company, thus further aligning their interests with shareholders.

The number of contingent shares granted but not released as at 31 March 2008, were 533,200 sia engineering company ANN sia engineering company (2007: 203,200) and 92,300 (2007: 36,900) for RSP and PSP respectively. Based on the achievement factor, the actual release of the awards could range from zero to a maximum of 639,840 (2007: 243,840) 115 and 138,450 (2007: 55,350) fully-paid ordinary shares of the Company, for RSP and PSP respectively. (b) shareCapital (inthousandsof$)(continued) 10. (c) (b) (a) otherReserves (inthousandsof$) 11. The total amount recognised in the profit and loss account for share-based compensation transactions transactions compensation share-based for account with employeescanbesummarisedasfollows: loss and profit the in recognised amount total The grants thatwillultimatelyvest. the of respect the year, financial current the For Share-based incentiveplans(continued) - Performanceshare plan - Restrictedshare plan - Employeeshare optionplan S Financial its foreign currency hedging instruments, and being compliant with the hedge accounting requirements of During the year, the Fair valuereserve the of that from different are currencies Group’sfunctional presentation currency.whose operations foreign of of statements translation financial the the from arising differences exchange records reserve translation currency foreign The Foreign currency translationreserve Balance at31March Share optionslapsed Exercise ofshare options Grant ofequity-settledshare options Balance at1April of equity-settledshare options. grant recordedon employees fromreceived services of value cumulative the of up made is reserve The employees. to granted options share equity-settled the represents reserve compensation Share-based Share-based compensationreserve gain orlossinthefairvalue reserve, andtheineffective portionintheprofit andlossaccount. the in resulted This accounting. hedge adopted hare-based compensationexpense Reporting RSP and and Group has completed the designation and documentation of the hedge relationship for Standard (FRS) 39: Financial PSP based on the fair values determined on grant date and estimation of share share of estimation and date grant on determined values fair the on based roup has provided approximately $914,000 (2006-07: $291,000) in $291,000) (2006-07: $914,000 approximately provided has Group Instruments – roup recognising the effective portion of the hedging the of portion effective the recognising Group notes to the Recognition and 2007-08 The Group andCompany The Group andCompany 2008 16,393 15,455 28,544 16,415 17,971 Measurement, the (5,432) financial statements (410) 858 31 March 80 2006-07 2007 13,194 12,903 17,971 13,229 11,898 (6,640) Group (516) 253 38 – 31March2008 116

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

11. other Reserves (in thousands of $) (continued)

(c) Fair value reserve (continued)

Fair value changes of derivative financial instruments designated as hedging instruments in cash flow hedges:

The Group and Company 31 March 2008 2007

Balance at 1 April – – Net gain on fair value changes 2,647 – Balance at 31 March 2,647 –

12. Deferred Taxation (in thousands of $)

The Group The Company 31 March 31 March 2008 2007 2008 2007

Balance at 1 April 13,191 14,842 13,129 14,522 Provision for the financial year 7,029 47 3,944 305 Under / (Over) provision in respect of prior years 1,566 (273) 1,546 (273) Adjustment for reduction in Singapore – (1,425) – (1,425) statutory tax rate Balance at 31 March 21,786 13,191 18,619 13,129

Deferred tax relates to the following items:

Group Company Consolidated Consolidated profit and Balance sheet balance sheet loss account 31 March T 2007/08 31 March 2008 2007 2007-08 2006-07 2008 2007 REPOR L A

U Deferred tax liability Differences in depreciation 19,038 14,267 4,771 (1,847) 18,718 13,963 Revaluation of forward currency 476 – 476 – 476 – contracts to fair value Undistributed profits of overseas 3,319 – 3,319 – – – associated companies

Deferred tax asset Other items (1,047) (1,076) 29 196 (575) (834)

sia engineering company ANN sia engineering company 21,786 13,191 18,619 13,129 Deferred income tax expense 8,595 (1,651) 117 Amounts representing interest Total future leasepayments Later than one year but not later than than later not but year one than Later * P Not laterthanoneyear lease payments are asfollows: minimum net the of value present the with together lease finance under payments lease minimum Future mature between2010and2011. at an interest of 2% per annum was fully repaid. The remaining finance leases for the equipment and vehicles months, 24 of period a over instalment by payable years, 30 of term lease a with building a for commitment The financeLeaseCommitments(inthousandsof$) 13. mounts lessthan$1,000. A rincipal value of long-term commitments commitments long-term of value rincipal five years under financelease G roup has finance leases for certain equipment, vehicles and building. During the financial year, the lease lease the year, financial the During building. and vehicles equipment, certain for leases finance has roup payments M inimum inimum 152 102 152 50 notes to the 2008 – of Principal Repayment The Group 152 102 152 31 March 50

– payments M inimum inimum financial statements ,5 1,952 1,952 ,5 1,952 1,952 ,5 1,952 1,952 2007 – * Repayment of Principal

– – 31March2008 * 118

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

14. fixed Assets (in thousands of $)

Balance at Disposals/ Acquisition of Exchange Balance at 1 April 2007 Additions Transfers a subsidiary Differences 31 March 2008 Group

Cost Leasehold land and buildings 201,002 1,022 – – 1 202,025 Plant, equipment and tooling 219,525 18,787 (134) 192 125 238,495 Engine overhaul tooling 4,980 175 – – – 5,155 Aircraft rotable spares 51,639 23,427 (4,341) – – 70,725 Office furniture and equipment 22,326 2,872 179 51 3 25,431 Motor vehicles 6,518 842 (297) 149 (3) 7,209 505,990 47,125 (4,593) 392 126 549,040 Advance and progress payments 2,673 11,868 (2,177) – – 12,364 508,663 58,993 (6,770) 392 126 561,404

Accumulated depreciation and impairment Leasehold land and buildings 58,054 6,803 – – – 64,857 Plant, equipment and tooling 160,792 17,168 (1,459) – 19 176,520 Engine overhaul tooling 4,536 103 – – – 4,639 Aircraft rotable spares 11,336 6,485 (3,697) – – 14,124 Office furniture and equipment 18,085 2,105 (303) – 3 19,890 Motor vehicles 5,532 416 (297) – (3) 5,648 258,335 33,080 (5,756) – 19 285,678 Net book value 250,328 275,726

Net Book Value 31 March 2008 2007

Leasehold land and buildings 137,168 142,948 T 2007/08 Plant, equipment and tooling 61,975 58,733 Engine overhaul tooling 516 444 REPOR

L Aircraft rotable spares 56,601 40,303 A

U Office furniture and equipment 5,541 4,241 Motor vehicles 1,561 986 Advance and progress payments 12,364 2,673 275,726 250,328

The Group 31 March 2008 2007

Net book value of fixed assets acquired under finance lease: sia engineering company ANN sia engineering company - Leasehold land and building – 2,282 - Plant, equipment and tooling 78 – 119 - Motor vehicles 80 – fixedAssets(inthousandsof$)(continued) 14. Leasehold landandbuildings Cost Group - Leaseholdlandandbuilding Net bookvalueoffixedassets acquired underfinance lease: Advance andprogress payments Motor vehicles Office furnitureandequipment Aircraft rotable spares Engine overhaultooling Plant, equipmentandtooling Leasehold landandbuildings Plant, equipmentandtooling Engine overhaultooling Aircraft rotable spares Office furnitureandequipment Motor vehicles Advance andprogress payments Leasehold landandbuildings Accumulated depreciation andimpairment Plant, equipmentandtooling Engine overhaultooling Aircraft rotable spares Office furnitureandequipment Motor vehicles Net bookvalue 1 April2006 Balance at 197,951 205,102 464,187 464,738 147,991 234,654 230,084 28,983 21,601 51,357 16,981 4,535 6,015 3,993 9,074 5,258 551

notes to the Additions 16,197 24,225 45,622 48,018 14,480 26,794 3,047 1,311 2,396 6,697 3,038 1,673 417 425 542 364 Disposals/ Transfers 2007 2007 174 219,525 (1,774) 159 51,639 (1,569) 389 505,990 (3,819) 403 508,663 (4,093) 169 160,792 (1,679) 313 258,335 (3,113) 5,2 230,084 250,328 4,4 146,594 142,948 financial statements 03319,909 40,303 87357,111 58,733 56 22,326 (586) (274) 76 11,336 (776) 59 18,085 (569) Net BookValue ,8 2,362 2,282 ,4 4,620 2,673 4,241 (90) 28 78 The Group 986 444 31 March 31 March 4 1 – 31 March 2007 Balance at 2006 2006 201,002 250,328 58,054 4,980 6,518 2,673 4,536 5,532 551 757 542

– 31March2008 120

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

14. fixed Assets (in thousands of $) (continued)

Balance at Disposals/ Balance at 1 April 2007 Additions Transfers 31 March 2008 Company

Cost Leasehold land and buildings 190,176 843 – 191,019 Plant, equipment and tooling 212,312 17,097 (9) 229,400 Engine overhaul tooling 4,535 – – 4,535 Aircraft rotable spares 48,518 22,816 (3,631) 67,703 Office furniture and equipment 21,395 2,743 204 24,342 Motor vehicles 6,251 832 (297) 6,786 483,187 44,331 (3,733) 523,785 Advance and progress payments 2,673 11,768 (2,178) 12,263 485,860 56,099 (5,911) 536,048

Accumulated depreciation and impairment Leasehold land and buildings 55,470 6,381 – 61,851 Plant, equipment and tooling 158,612 16,199 (1,346) 173,465 Engine overhaul tooling 4,500 23 – 4,523 Aircraft rotable spares 11,071 6,072 (3,619) 13,524 Office furniture and equipment 17,652 1,905 (307) 19,250 Motor vehicles 5,405 368 (298) 5,475 252,710 30,948 (5,570) 278,088 Net book value 233,150 257,960

Net Book Value 31 March 2008 2007

Leasehold land and buildings 129,168 134,706

T 2007/08 Plant, equipment and tooling 55,935 53,700 Engine overhaul tooling 12 35

REPOR Aircraft rotable spares 54,179 37,447 L A

U Office furniture and equipment 5,092 3,743 Motor vehicles 1,311 846 Advance and progress payments 12,263 2,673 257,960 233,150 sia engineering company ANN sia engineering company

121 fixedAssets(inthousandsof$)(continued) 14. Leasehold landandbuildings Cost Company Advance andprogress payments Motor vehicles Office furnitureandequipment Aircraft rotable spares Engine overhaultooling Plant, equipmentandtooling Leasehold landandbuildings Plant, equipmentandtooling Engine overhaultooling Aircraft rotable spares Office furnitureandequipment Motor vehicles Advance andprogress payments Leasehold landandbuildings Accumulated depreciation andimpairment Plant, equipmentandtooling Engine overhaultooling Aircraft rotable spares Office furnitureandequipment Motor vehicles Net bookvalue 1 April2006 Balance at 187,514 200,166 448,092 448,643 146,001 230,166 218,477 28,983 20,969 49,181 16,748 4,535 5,925 3,993 9,074 5,169 551

notes to the Additions 13,268 20,680 38,047 40,444 13,826 25,227 2,658 1,019 2,397 6,289 2,769 1,497 422 507 339 – Disposals/ Transfers 2007 112 212,312 (1,122) 115 48,518 (1,145) 292 483,187 (2,952) 327 485,860 (3,227) 125 158,612 (1,215) 263 252,710 (2,683) 3,5 218,477 233,150 3,0 138,333 134,706 financial statements 74719,909 54,165 37,447 53,700 53 21,395 (593) (275) 72 11,071 (772) 53 17,652 (593) (103) Net BookValue 2,673 ,4 4,221 3,743 (96) 846 31 March 4 – – – 35 31 March 2007 Balance at 2006 190,176 233,150 55,470 4,535 6,251 2,673 4,500 5,405 551 756 542

– 31March2008 122

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

14. fixed Assets (in thousands of $) (continued)

Details of leasehold land and buildings are as follows:

Description Land Area/Gross Floor Area Title

(i) Hangar 2 at 31 Airline Road, 13,759 sqm/44,510 sqm Leasehold, 48 years commencing Singapore 9 January 1992

(ii) Hangar 3 at 21 Airline Road, 10,047 sqm/12,444 sqm Leasehold, 37 years commencing Singapore 12 January 2001

(iii) engine Overhaul Facility at 12,465 sqm/4,774 sqm Leasehold, 41 years commencing 30 Loyang Ave, Singapore 8 May 1997

(iv) Factory at 8 Loyang Lane, 6,961 sqm/4,055 sqm Leasehold, 30 years commencing Singapore 16 November 1994

(v) Hangar 4 at Airline Road, 7,650 sqm/8,783 sqm Leasehold, 35 years commencing Singapore 15 November 2002

(vi) Hangar 5 at Airline Road, 7,650 sqm/10,392 sqm Leasehold, 35 years commencing Singapore 15 November 2002

(vii) Factory at 45 Changi North 4,447 sqm/2,738 sqm Leasehold, 30 years commencing Crescent, Singapore 10 August 2005 T 2007/08 REPOR L A U sia engineering company ANN sia engineering company

123 Other intangibleassets Computer software Other intangibleassets Computer software Computer software Cost Group Net bookvalue Other intangibleassets Computer software Accumulated depreciation andimpairment Other intangibleassets Computer software Cost Group intangibles (inthousandsof$) 15. Other intangibleassets Computer software Accumulated depreciation andimpairment Other intangibleassets Net bookvalue 1 April2007 Balance at 15,258 5,430 23,097 303 1,104 36,097 898114331,340 6,387 23,710 303 1,104 38,968 2,871 1 957 613 1 April2006

Balance at Additions 35,204 35,204 16,004 16,004 19,200

– – – Disposals/ Transfers notes to the Additions – – – – 2,871 3,636 7,093 7,706 Acquisition of 765 613 a subsidiary 1,338 Disposals/ Transfers 2 – – – 2007 2008 Difference Exchange financial statements 11,625 30019,200 13,000 52819,200 15,258 Net BookValue Net BookValue 128 128 2,643 8,982 2,258 31 March 31 March – – – – 4 1 1 4 8 – 31 March 2007 31 March 2008 Balance at Balance at 2006 2007 36,097 38,968 23,097 15,258 23,710 15,258 13,000 11,625 37,510 30,098 28,528 41,723 2,871 2,258 4,213 1,570 613

– – 31March2008 124

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

15. intangibles (in thousands of $) (continued)

Balance at Disposals/ Balance at 1 April 2007 Additions Transfers 31 March 2008 Company

Cost Computer software 35,198 1,015 276 36,489 Other intangible assets 2,871 – – 2,871 38,069 1,015 276 39,360

Accumulated depreciation and impairment Computer software 22,540 5,246 – 27,786 Other intangible assets 613 957 – 1,570 23,153 6,203 – 29,356 Net book value 14,916 10,004

Net Book Value 31 March 2008 2007

Computer software 8,703 12,658 Other intangible assets 1,301 2,258 10,004 14,916

Balance at Disposals/ Balance at 1 April 2006 Additions Transfers 31 March 2007 Company

Cost Computer software 34,525 545 128 35,198 Other intangible assets – 2,871 – 2,871

T 2007/08 34,525 3,416 128 38,069

REPOR Accumulated depreciation and impairment L

A Computer software 15,627 6,913 – 22,540 U Other intangible assets – 613 – 613 15,627 7,526 – 23,153 Net book value 18,898 14,916

Net Book Value 31 March 2007 2006

Computer software 12,658 18,898 sia engineering company ANN sia engineering company Other intangible assets 2,258 – 125 14,916 18,898 b) a) During thefinancialyear: Details ofthesubsidiarycompaniesat31March are asfollows: Unquoted shares, atcost subsidiary Companies (in thousandsof$) 16. Pte Ltd* Singapore Jamco SIAEC GlobalPteLtd* Pty Ltd Services Australia A Pte Limited* Engineering Services Component A Corporation (Philippines) A ost ofinvestmentandissuedpaid-upshare capitalis$2 @ C &Young, AuditedbyErnst Philippines(SGV&Co) # &Y auditedbyErnst ^ *

rnst &Y auditedbyErnst viation viation ircraft ircraft erospace erospace N The The respectively. million $1.3 and acquisition, theCompanyinjectedanadditional $1.3millioninAMSA. million $0.3 to amounting subsidiary of acquisition on of $1.6 million for its 100% equity interest in in company maintenance line owned privately a (“AMSA”), The Limited (“ACES”).There wasnochangeintheGroup’s 51% equitystakeinACES. ame ofcompany ^ M Company completed the acquisition of its subsidiary, C P aintenance aintenance artnership artnership ompany injected an additional $1.2 million in in million $1.2 additional an injected ompany # oung, Australia oung, Singapore

the airport and non-technicalhandlingat technical including services, P the airport and non-technicalhandlingat technical including services, P of aircraft galleys equipment andrefurbishment M Investment holding Boeing andAirbusaircraft mechanical equipmentfor Repair andoverhaulofhydro- rovide aircraft maintenance maintenance aircraft rovide maintenance aircraft rovide anufacturing aircraft cabin cabin aircraft anufacturing Principal activities AMSA, with net tangible assets and intangible assets arising Australia Philippines Singapore Singapore Singapore incorporation incorporation and placeof Country of A notes to the business erospace erospace Aircraft ustralia. The Australia. Maintenance C omponent omponent 10,934 2008 2,905 2,762 3,816 @ Cost ompany paid a considerationa paid Company 2007 2008 2,762 3,816 9,742 E Services financial statements ngineering ngineering 20,417 The Company @ – 31 March S P held bytheGroup ubsequent to the the to ubsequent 2008 ercentage equity equity ercentage Australia 100.0 0. 100.0 100.0 51.0 65.0 51.0 S ervices ervices 2007 16,320 Pty Ltd 2007 51.0 65.0 51.0 P – te te – 31March2008 126

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

17. associated Companies (in thousands of $)

The Group The Company 31 March 31 March 2008 2007 2008 2007

Unquoted shares, at cost 164,672 164,672 164,672 164,672 Share of post-acquisition profits 277,034 240,360 – – Goodwill written-off to reserves (25,237) (25,237) – – Translation adjustment (72,874) (40,147) – – 343,595 339,648 164,672 164,672

Details of the associated companies at 31 March are as follows:

Country of incorporation and Percentage equity Name of company Principal activities place of business Cost held by the Group 2008 2007 2008 2007

Asian Compressor Repair and overhaul of Taiwan 4,104 4,104 24.5 24.5 Technology Services aircraft engine high pressure Co Ltd# ++ compressor stators

Asian Surface Repair and overhaul of Singapore 2,718 2,718 39.2 39.2 Technologies Pte Ltd^ ++ aircraft engine fan blades

Combustor Airmotive Repair and overhaul of Singapore 3,011 3,011 49.0 49.0 Services Pte Ltd## + aircraft engine combustion chambers, guides, fuel nozzles and related parts

Eagle Services Asia Repair and overhaul of Singapore 71,588 71,588 49.0 49.0 Private Limited## ++ aircraft engines

Fuel Accessory Service Repair and overhaul of Singapore 5,071 5,071 49.0 49.0

T 2007/08 Technologies Pte Ltd## + engine fuel components and accessories REPOR L

A International Aerospace Repair of tubes, ducts and Singapore 5,286 5,286 33.3 33.3 U Tubes-Asia Pte Ltd## ++ manifolds for aircraft engines and airframe application

Jamco Aero Design & Provide turnkey solutions for Singapore 767 767 45.0 45.0 Engineering Pte Ltd** +++ aircraft interior modifications

Messier Services Asia Repair and overhaul of Singapore 13,971 13,971 40.0 40.0 Private Limited@ ++ Boeing and Airbus series landing gears

Pan Asia Pacific Aviation Provide aircraft maintenance Hong Kong 5,373 5,373 47.1 47.1 sia engineering company ANN sia engineering company Services Ltd*+++ services, including technical and non-technical handling 127 at the airport F Non-current liabilities Current liabilities Current assets Non-current assets F The Group’s share oftheconsolidatedassetsandliabilitiesassociatedcompaniescomprises: associated Companies (inthousandsof$)(continued) 17. Shareholders’ equityandloans Services PteLtd Turbine Coating G Pte Ltd(GASCA) S Limited P Services Engineering PT JasAero- +++ ++ + auditedbyRSMChioLim,Singapore ^ ** * auditedbyDeloitte&Touche, Indonesia @@ auditedbyDeloitte&Touche, Singapore @ auditedbyPriceWaterhouseCoopers, Ireland ### auditedbyPriceWaterhouseCoopers, Singapore auditedbyPriceWaterhouseCoopers, Taiwan## # unds employed: inanced by: auditedbyBD O, HongKong ervice ervice W oodrich Y & auditedbyErnst N A Financial yearend31March Financial yearend31December Financial yearend30November ame ofcompany

I nternational nternational ###+ C @@ ++ A enter- erostructures

A ##+

sia sia ** ++ oung, Singapore airfoils turbine engine aircraft R reversers andpylons aircraft nacelles,thrust R and related parts components cases, engine turbine aircraft of re-manufacture R at theairport non-technical handling and technical including maintenance services, Provide aircraft epair and overhaul of of overhaul and epair epair and overhaul of of overhaul and epair and overhaul epair, Principal activities Singapore Singapore Ireland Indonesia incorporation and and incorporation place ofbusiness Country of notes to the 37,220 2008 6,217 3,675 5,671 Cost 37,220 2007 financial statements 6,217 3,675 5,671 341,390 439,047 359,858 341,390 2008 (92,052) 79,189 (5,605) The Group 31 March P held bytheGroup 2008 ercentage equity equity ercentage 49.0 49.0 24.5 40.0 337,119 386,008 302,945 337,119 2007 (43,924) 83,063 (4,965) 2007 – 31March2008 49.0 49.0 24.5 40.0 128

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

17. associated Companies (in thousands of $) (continued)

The Group’s share of the consolidated results of the associated companies is as follows:

The Group 2007-08 2006-07 Results Revenue 685,224 710,200 Profit before taxation 107,088 106,136 Profit for the year 97,640 97,346

18. Joint Venture Companies (in thousands of $)

The Group The Company 31 March 31 March 2008 2007 2008 2007

Unquoted shares, at cost 56,599 56,599 56,599 56,599 Share of post acquisition profits 53,498 36,297 – – Translation adjustment (15,703) (7,068) – – 94,394 85,828 56,599 56,599

Details of the joint venture companies at 31 March are as follows:

Country of incorporation and Percentage equity Name of company Principal activities place of business Cost held by the Group 2008 2007 2008 2007

International Engine Repair and overhaul Singapore 10,067 10,067 50.0 50.0 Component Overhaul of aero engine Pte Ltd *+ components

T 2007/08 and parts Singapore Aero Engine Repair and overhaul Singapore 46,532 46,532 50.0 50.0

REPOR +

L Services Pte Ltd * of aircraft engines A U * Audited by Ernst & Young, Singapore + Financial year end 31 December sia engineering company ANN sia engineering company

129 Unquoted equityinvestments,atcost long-termInvestments(nthousandsof$) 19. Profit fortheyear Profit before taxation Revenue R The Group’s share oftheconsolidatedresults ofthejointventure companiesisasfollows: Shareholders’ equityandloans F Non-current liabilities Current liabilities Current assets Non-current assets F The Group’s share oftheconsolidatedassetsandliabilitiesjoint venture companiescomprises: 18. Republic ofChina. The The Limited, which is incorporated and operates in Hong Kong Kong Hong in operates and incorporated is which Limited, inanced by: unds employed: esults C Joint VentureCompanies (inthousandsof$)(continued) ompany holds a 10.0% (2007: 10.0%) investment in ordinary shares of Hong Kong Kong Hong of shares ordinary in investment 10.0%) (2007: 10.0% a holds ompany notes to the S 2008 pecial pecial 14,606 The Group 31 March A dministrative dministrative 2007 14,606 financial statements R 2007-08 egion of the the of egion 542,613 195,211 147,557 2008 2008 (37,278) (63,539) A 14,606 94,394 50,758 50,827 94,394 47,654 ero ero The Company The Group The Group 31 March 31 March E ngine ngine 2006-07 426,037 192,515 135,437 2007 2007 P S (38,117) (68,570) 14,606 85,828 33,415 33,427 85,828 57,078 eople’s eople’s ervices ervices – 31March2008 130

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

20. trade Debtors (in thousands of $)

The table below is an analysis of trade debtors as at 31 March 2008:

The Group The Company 31 March 31 March 2008 2007 2008 2007

Not past due and not impaired 30,690 29,547 22,494 21,877 Past due but not impaired* 38,675 26,464 34,693 23,989 69,365 56,011 57,187 45,866 Impaired trade debtors – collectively assessed 7,284 3,412 7,208 3,412 Less: Accumulated impairment losses (7,284) (3,412) (7,208) (3,412) – – – – Impaired trade debtors – individually assessed: customers in bankruptcy or other financial reorganisation 988 1,832 988 1,832 customers who default in payment within stipulated framework 4 42 – – customers who dispute billing invoice – 35 – – Less: Accumulated impairment losses (992) (1,909) (988) (1,832) – – – –

Total trade debtors, net 69,365 56,011 57,187 45,866

* Aging of trade debtors that are past due but not impaired Less than 30 days 13,130 12,834 12,676 12,596 30 days to 60 days 13,904 5,812 12,431 5,111 60 days to 90 days 5,707 2,457 5,189 1,587 more than 90 days 5,934 5,361 4,397 4,695

T 2007/08 38,675 26,464 34,693 23,989

The carrying amount of trade debtors impaired by credit losses is reduced through the use of an allowance REPOR L

A account unless on the date the impairment loss is recognised, the Group ascertains the amount to be U uncollectible whereby it would be reduced directly. In subsequent periods when a trade debtor is ascertained to be uncollectible, it is written off against the allowance account. sia engineering company ANN sia engineering company

131 Prepayments Balance at1April debts. doubtful for provision specific provision fordoubtfuldebtsisasfollows: deducting after stated are debtors Trade As at31March 2008,90%oftradedebtors(2007:95%)were heldinUnitedStatesdollarsbytheGroup. are balances) debtor deems theamountnottobecollectible. of aging days 120 than (more payments considered in indicators that the trade debtor is delinquency impaired. or default and reorganisation, S tradeDebtors(inthousandsof$)(continued) 20. Other debtors Acquisition ofsubsidiary Charge /(Write-back) toprofit andloss,net The amounts due from related parties, which are carried at cost, are unsecured, trade-related, interest-free interest-free trade-related, unsecured, are cost, at carried are and repayable ondemand. which parties, related from due amounts The unsecured, relate are d P cost, 23. at carried are which company, holding immediate the trade-related, interest-free andrepayable on demand. from due amounts The immediate Holding Company 22. $4,484,000 of contracts forward and $236,000) $4,484,000 (2007:$437,000)fortheCompany. (2007: the $274,000 for of $437,000) (2007: deposits include debtors Other Balance at31March Bad debtswritten-off directly toprofit andlossaccount, prepayments andotherebtors(inthousandsof$) 21. ignificant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial financial or bankruptcy enter will debtor the that probability debtor, the of difficulties financial ignificant net ofdebtsrecovered arties op n dpst o $2,0 (07 $1,0) n frad otat of contracts forward and $116,000) (2007: $121,000 of deposits and Group Individual trade debtor is written off when management notes to the 2008 2008 20,544 21,788 1,244 5,321 2,949 8,276 The Group The Group 31 March 31 March 289 6 2007 2007 10,107 (4,786) 1,140 8,635 9,775 5,321 644 – A n analysis of the specific specific the of analysis n financial statements 2008 2008 20,258 21,235 5,244 2,952 8,196 The Company The Company 977 289 31 March 31 March – 2007 2007 10,072 (4,828) 8,475 9,463 5,244 988 644 – – 31March2008

132

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

24. stocks (in thousands of $)

The Group The Company 31 March 31 March 2008 2007 2008 2007

Aircraft and component spares 16,689 10,230 14,510 8,906 Consumable stores and stocks 1,239 422 1,083 283 Raw materials 1,253 828 – – Total stocks at lower of cost and net realisable value 19,181 11,480 15,593 9,189

During the financial year, the Group wrote down $0.1 million (2006-07: $0.1 million) of stocks, which are recognised as expense in the profit and loss account.

Aircraft and component spares and raw materials are stated after deducting provision for stock obsolescence. An analysis of the provision for stock obsolescence is as follows:

The Group The Company 31 March 31 March 2008 2007 2008 2007

Balance at 1 April 5,401 5,363 5,336 5,319 Charge to profit and loss, net 914 53 884 17 Provision utilised during the financial year (17) (15) – – Balance at 31 March 6,298 5,401 6,220 5,336

Stocks are stated at:

The Group The Company 31 March 31 March 2008 2007 2008 2007

Cost 4,697 2,589 1,109 298 Net realisable value 14,484 8,891 14,484 8,891 T 2007/08 19,181 11,480 15,593 9,189 REPOR

L 25. short-Term Deposits (in thousands of $) A U The Group The Company 31 March 31 March 2008 2007 2008 2007

Deposits placed with the immediate holding company 361,467 360,218 361,467 360,218 Fixed deposits placed with banks 9,414 9,527 1,999 2,098 370,881 369,745 363,466 362,316 sia engineering company ANN sia engineering company

133 Balance at1April Trade tradeanOtherCreitors(inthousandsof$) 27. As at31March 2008,68%ofcashandbankbalances(2007:58%)were heldinUnitedStatesdollarsbytheGroup. based ondailybankdepositratesrangingfrom 0.0%to3.8%(2007:0.1%4.8%)perannum. M cashandBankalances 26. As at31March 2008,1.7%ofshort-termdeposits(2007:3.2%)were heldinUnitedStatesdollarsbytheGroup. ranging periods varying at repriced are rates interest 1-12 months(2007:12months). The demand. on withdrawn be can and annum per cash on theimmediate the of depending requirements periods varying for institutions financial external and company holding to the surplus Funds short- Term Deposits(inthousandsof$)(continued) 25. was fullyrepaid. in denominated facility credit revolving the year, the During Revolving credit facility Write-back toprofit andloss,net Accruals Provision utilisedduringthe year Provision forwarrantyclaims Balance at31March Sundry bankloans (in thousandsof$) 28. An analysisoftheprovision forwarrantyclaimsisasfollows: As at31March 2008,52%oftradecreditors (2007:44%)were heldinUnitedStatesdollarsbytheGroup. s o tee aacs r pae i itrs-ern cret cons ann itrs a fotn rates floating at interest earning accounts current interest-bearing in placed are balances these of ost G roup. These deposits earn interest ranging from 0.5% to 7.26% (2007: 2.0% to 5.1%) to 2.0% (2007: 7.26% to 0.5% from ranging interest earn deposits These Group. roup’s working capital requirements are placed in short-term deposits with the immediate the with immediate deposits in are short-term placed requirements capital roup’s working notes to the S ingapore dollars taken by a subsidiary company company subsidiary a by taken dollars ingapore 100,557 128,907 231,111 2008 2008 1,553 1,095 The Group The Group (254) (747) 31 March 31 March 552 552 144,601 243,428 2007 2007 96,755 (1,063) 3,029 1,553 1,553 (413) 519 financial statements 120,656 211,603 2008 2008 2008 90,395 1,553 The Company The Company (254) (747) 552 552 The Group 31 March 31 March 31 March − – 140,357 228,818 2007 2007 2007 86,908 (1,063) 3,029 1,553 1,553 (413) 750 – – 31March2008

134

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

29. cash Flow From Operating Activities (in thousands of $)

The Group 2007-08 2006-07 Cash Flow From Operating Activities Profit before taxation 285,569 270,961 Adjustment for: interest income (9,796) (13,676) interest on external borrowings 34 33 Depreciation 33,080 26,794 amortisation of intangibles 6,387 7,706 share of profits of associated / joint venture companies (157,915) (139,563) Dividend income from long-term investment (13,682) (15,452) surplus on disposal of fixed assets (1,331) (274) exchange differences (785) 2,950 share-based payment 16,369 13,194 Operating profit before working capital changes 157,930 152,673 increase in debtors (19,521) (14,839) increase in stocks / work-in-progress (14,286) (20,842) (Decrease) / Increase in creditors (11,882) 19,784 Decrease in amounts owing from related companies 17,639 18,292 Cash generated from operations 129,880 155,068 income taxes paid (38,165) (9,682) Net cash provided by operating activities 91,715 145,386

On 8 August 2007, the Company completed the acquisition of its subsidiary, Aircraft Maintenance Services Australia Pty Ltd (“AMSA”), a privately owned line maintenance company in Australia, and paid a consideration of $1.6 million for its 100% equity interest in AMSA.

A summary of effects of acquisition of AMSA is as follows:

S$’000

T 2007/08 Net assets acquired Current assets 1,079 394

REPOR Non-current assets

L (1,034) A Current liabilities U Non-current liabilities (143) Net assets acquired 296 Intangible assets arising on acquisition of subsidiary 1,338 Purchase consideration satisfied by cash 1,634

Net cash flow on acquisition Cash paid (1,634) Cash acquired 170 Cash outflow on acquisition, net of cash acquired (1,464)

sia engineering company ANN sia engineering company From the date of acquisition to the end of financial year,AMSA incurred a net loss of approximately $921,000. If the acquisition had taken place at the beginning of the financial year, the revenue and net profit of theG roup 135 is estimated to be approximately $1,011,534,000 and $253,876,000 respectively. time to time, and not the principal amount hedged. Therefore the possibility of material loss arising in the the in Financial riskmanagementpoliciesare periodicallyreviewed andapproved bytheAuditCommittee. arising loss material of possibility the Therefore hedged. amount event ofnon-performancebyacounterpartyisconsidered tobeunlikely. principal the not and time, to time revenue liability, asset, matching the hedged. on being gains costs and or losses offset derivatives the on losses and gains because the expose not do they management, risk of purpose the for used are derivatives As financial performance.TheGroup’s policyistousederivativeshedgespecificexposures. The rates. interest and The countries. seven in operate that companies venture joint and subsidiary,associated in investments has also (b) i (a) capital andOtherCommitments 30. The financialriskmanagementobjectivesandpolicies 31. more than5years afteroneyearbutlessthan5years G roup operates principally in principally operates Group Future leasepaymentsundernon-cancellableoperatingleasesare asfollows: no are There years. 18 and 1 restrictions placedupontheGroup between ortheCompanybytheseleasearrangements. of terms lease have leases non-cancellable These buildings. The Operating leasecommitments approximately $1,534,000(2007:approximately $6,235,000). the for $57,622,000) approximately (2007: approximately $68,323,000(2007:approximately $57,579,000)fortheCompany. $68,323,000 approximately aggregated The Capital expenditure commitments Within oneyear n addition, the the addition, n roup’s operations carry certain financial risks, including the effects of changes in foreign exchange rates rates exchange foreign in changes of effects the including risks, financial certain carry operations roup’s G roup has entered into operating lease agreements for certain equipment and leasehold land and land leasehold and equipment certain for agreements lease operating into entered has Group roup and the the and roup G roup’s share of a joint venture company’s purchase commitments for fixed assets total total assets fixed for commitments purchase company’s venture joint a of share roup’s G C oreover, counterparty credit risk is generally restricted to any hedging gain from gain hedging any to restricted generally is risk credit counterparty Moreover, roup’s risk management approach is to moderate the effects of such volatility on its its on volatility such of effects the moderate to is approach management risk roup’s ompany have contractual commitments for capital expenditure. expenditure. capital for commitments contractual have ompany ingapore and generates revenue mainly in mainly revenue generates and Singapore (in thousandsof$) notes to the ingapore dollars. The dollars. Singapore financial statements 2008 roup to market risk market to Group S 4,886 3,090 1,191 The Company uch commitments commitments uch 605 31 March

op and Group 2007 2,269 1,437 Group 574 258 – 31March2008

136

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

31. financial risk management objectives and policies (continued)

(a) Foreign currency risk

The Group is exposed to the effects of foreign exchange rate fluctuations because of its foreign currency denominated operating revenue and expenses. For the financial year ended 31 March 2008, these accounted for 18% of total revenue (2006-07: 19%) and 8% of total operating expenses (2006-07: 6%). The Group’s largest exposure is from United States dollars.

The Group manages its foreign exchange exposure by a policy of matching, as far as possible, receipts and payments in each individual currency. Surpluses of convertible currencies are sold, as soon as practicable, for Singapore dollars. The Group also uses forward foreign currency contracts to hedge a portion of its future foreign exchange exposure. Such contracts provide for the Group to sell United States dollars at predetermined forward rates, depending on forecast requirements, with settlement dates that range from one month up to one year. The Group uses forward contracts purely as a hedging tool. It does not take positions in currencies with a view to make speculative gains from currency movements.

(b) Interest rate risk

The Group’s exposure to market risk for changes in the interest rates relates primarily to the Group’s short-term deposits with the immediate holding company and banks.

(c) Counterparty risk

surplus funds are invested in interest-bearing bank deposits, deposits with immediate holding company and other high quality short-term liquid investments. Counterparty risks are managed by limiting aggregated exposure on all outstanding financial instruments to any individual counterparty, taking into account its credit rating. Such counterparty exposures are regularly reviewed, and adjusted as necessary. This mitigates the risk of material loss arising in the event of non-performance by counterparties.

The Group determines concentrations of credit risk by monitoring the industry, country and credit rating of its counterparties. The table below shows an analysis of credit risk exposure that exceeds 5% of the financial assets of the Group and the company as at 31 March:

The Group The Company

T 2007/08 2008 2007 2008 2007 2008 2007 2008 2007 Outstanding Percentage of total Outstanding Percentage of total

REPOR balance ($’000) financial assets balance ($’000) financial assets L A

U Counterparty profiles By industry: airlines 474,486 485,353 76% 84% 465,300 478,498 78% 87% Financial institutions 75,813 40,063 12% 7% 64,028 26,146 11% 5% others 10,165 4,601 2% 1% 4,522 1,212 1% 0%

By region: east Asia 530,778 504,586 85% 88% 505,323 480,600 85% 88% europe 6,367 5,734 1% 1% 6,282 5,726 1% 1% south West Pacific 4,980 1,906 1% 0% 4,133 1,873 1% 0%

sia engineering company ANN sia engineering company americas 12,119 7,920 2% 1% 11,962 7,801 2% 1% West Asia and Africa 6,220 9,871 1% 2% 6,150 9,856 1% 2% 137 (c) financialriskmanagementobjectivesandpolicies(continued) 31. 31 at as (d) financial Derivative Trade and other The Company financial Derivative Trade andother Finance lease lease Finance Counterparty risk(continued) The maturity profile of the financial liabilities of the the of liabilities financial the of profile maturity The future as well as purposes capital working for capital commitments.Anyshortfallcanbemetbybankborrowings.sufficient be to expected are operations, from flow cash The approximately $9.4million(2007:$10.7million). million). $400.3 (2007: million $437.3 Liquidity risk Non-rated disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months months 12 within due Balances flows. cash undiscounted contractual approximate the theircarryingamountsastheimpactofdiscountingisinsignificant. are table the in disclosed Investment grade(Baa) By Moody’s credit Counterparty profiles nvestment grade Investment grade Bank loans The Group 2008 ($’000) contracts currency Forward instruments: creditors contracts currency Forward instruments: creditors commitments (A toaa) ratings: Group’s holding of cash and short-term deposits, together with committed funding facilities and net rh 08 the 2008, March

211,051 230,559 Within Within er12yas23yas34yas4-5years 3-4years 2-3years 1-2years 1 year 485,857 92,239 92,239 74,607 2008 balance ($’000) op a a is ipsl cs ad hr-em eois mutn to amounting deposits short-term and cash disposal, its at had Group Outstanding 50 – – 491,770 38,247 2007 n addition, the addition, In The Group

830 68 – – – – – – P 2008 ercentage of total financial assets 78% 12% G – roup and the the and roup roup had available short-term credit facilities of facilities credit short-term available had Group notes to the – – – – – 2007 85% 7% – 469,822 C 4 – – – – – 64,028 2008 balance ($’000) ompany is as follows. The amounts amounts The follows. as is ompany Outstanding – 479,710 26,146 2007 The Company – – – – – – financial statements

M – er Total 5 years ore than than ore P 2008 ercentage of total financial assets 79% 11% – – – – – – – 211,051 230,559 92,239 92,239 2007 87% 152 5% – 31March2008 – – 138

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

31. financial risk management objectives and policies (continued)

(d) Liquidity risk (continued)

Within More than 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total 2007 ($’000) The Group Bank loans 750 – – – – – 750 Finance lease commitments 1.952 – – – – – 1.952 Trade and other creditors 241,875 – – – – – 241,875 Derivative financial instruments: Forward currency contracts 28,523 – – – – – 28,523

The Company Trade and other creditors 227,265 – – – – – 227,265 Derivative financial instruments: Forward currency contracts 28,523 – – – – – 28,523

(e) Credit Risk

The maximum exposure to credit risk for the Group and the Company are as follows:

The Group The Company 31 March 31 March (In thousands of $) 2008 2007 2008 2007 T 2007/08 Unquoted equity investments 14,606 14,606 14,606 14,606 Trade debtors 69,365 56,011 57,187 45,866 REPOR

L Prepayments and other debtors 21,788 9,775 21,235 9,463 A U Immediate holding company 53,805 73,705 51,168 73,617 Related Parties 29,625 22,221 25,229 19,099 Short term deposits 370,881 369,745 363,466 362,316 Cash and bank balances 66,413 30,556 62,029 24,057 626,483 576,619 594,920 549,024

concentrations of credit risk with respect to trade debtors are limited to the entities comprising the Group’s customer base. The Group carefully assesses the financial strength of its customers and generally does not require any collateral. At 31 March 2008, the only trade debtor exceeding 10% of the Group’s trade debtors was an amount of approximately $53,805,000 (2007: approximately $73,705,000) due from

sia engineering company ANN sia engineering company its immediate holding company, Singapore Airlines Limited.

139 (a) financialinstruments(inthousandsof$) 32. following table analyses the financial assets and liabilities in the balance sheet by the class of financial financial of class the by The sheet balance recognised. the in are instrument towhichtheyare assigned,andthereforeliabilities bythemeasurement basis: losses, and and assets gains financial value the fair analyses table including following expenses, and income how and measured, in policies accounting principal The cost. Financial assets and financial liabilities are measured on an ongoing basis either at fair value or atClassification offinancialinstruments amortised Total liabilities Total non-financialliabilities Total financialliabilities Total assets Total non-financial assets Total financialassets Cash andbankbalances Short termdeposits Related parties Immediate holdingcompany Other debtors Trade debtors The Company 2008 Total liabilities Total non-financialliabilities Total financialliabilities Trade andothercreditors Total assets Total non-financialassets Total financialassets Cash andbankbalances Short termdeposits Related parties Immediate holdingcompany Other debtors Trade debtors Trade and othercreditors Unquoted equityinvestments Finance leasecommitments L Unquoted equityinvestments A The Group 2008 L A iabilities iabilities ssets ssets receivables Loans and and Loans 7,5 4664,484 14,606 574,853 363,466 4,484 14,606 606,149 370,881 62,029 25,229 51,168 15,774 57,187 66,413 29,625 53,805 16,060 69,365 N ote 2 describe how the classes of financial instruments are are instruments financial of classes the how describe 2 ote – – – – – – – A sale financial financial sale vailable-for- assets 14,606 14,606 notes to the – – – – – – – – – – – – – – – – – Derivatives Derivatives used for hedging 4,484 4,484 – – – – – – – – – – – – – – – – – mrie otTotal amortised cost liabilities at Financial Financial financial statements 1,5 211,051 211,051 230,711 230,559 230,711 230,559 1,5 211,051 211,051 5 152 152 – – – – – – – – – – – – – – – – 1,161,391 1,413,530 593,943 625,239 249,786 567,448 363,466 273,372 788,291 370,881 20,258 20,544 62,029 25,229 51,168 57,187 66,413 29,625 53,805 69,365 38,735 42,661 14,606 14,606 – 31March2008 140

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

32. financial instruments (in thousands of $) (continued)

(a) Classification of financial instruments (continued)

Available-for- Derivatives Financial Loans and sale financial used for liabilities at receivables assets hedging amortised cost Total 2007 The Group Assets Unquoted equity investments – 14,606 – – 14,606 Trade debtors 56,011 – – – 56,011 Other debtors 8,198 – 437 – 8,635 Immediate holding company 73,705 – – – 73,705 Related parties 22,221 – – – 22,221 Short term deposits 369,745 – – – 369,745 Cash and bank balances 30,556 – – – 30,556 Total financial assets 560,436 14,606 437 – 575,479 Total non-financial assets 739,622 Total assets 1,315,101

Liabilities Bank loans – – – 750 750 Finance lease commitments – – – 1,952 1,952 Trade and other creditors – – – 241,875 241,875 Total financial liabilities – – – 244,577 244,577 Total non-financial liabilities 60,114 Total liabilities 304,691

2007 The Company Assets Unquoted equity investments – 14,606 – – 14,606 Trade debtors 45,866 – – – 45,866 T 2007/08 Other debtors 8,038 – 437 – 8,475 Immediate holding company 73,617 – – – 73,617 REPOR

L Related parties 19,099 – – – 19,099 A U Short term deposits 362,316 – – – 362,316 Cash and bank balances 24,057 – – – 24,057 Total financial assets 532,993 14,606 437 – 548,036 Total non-financial assets 531,715 Total assets 1,079,751

Liabilities Trade and other creditors – – – 227,265 227,265 Total financial liabilities – – – 227,265 227,265 Total non-financial liabilities 59,588 sia engineering company ANN sia engineering company Total liabilities 286,853 141 (d) (c) (b) financialinstruments(inthousandsof$)(continued) 32. rates rarely changeinisolation. Thesensitivityanalysisisbasedonthefollowingassumptions: market practice in only,as purposes illustrative for is analysis This constant. remaining variables other 31 at applicable rates the from currencies, in weakening or strengthening 1% a of equity and loss and The Market risksensitivityanalysis Derivative financialinstrumentsincludedinthebalancesheetsare asfollows: Derivative financialinstrumentsandhedgingactivities (iii) (ii) (i) or liquidationsale. or exchanged be forcedarm’sa an in in than parties could other willing transaction, and length knowledgeable between settled instrument the which at amount the is instrument financial a of value fair The Fair Values includedunderotherdebtors * Forward currency contracts A ssets* foreseeable future. The cannot bereliably measuredvalue usingvaluationtechniques. fair the and prices market no have cost at stated investment long-term the in shares Unquoted Financial instrumentscarriedatotherthanfairvalue and debtors other and trade creditors. Thecarryingvaluesofthelong-termleasecommitmentsapproximate theirfairvalues. loans, companies, venture joint and values associated fair company, their holding immediate subsidiary, by/to approximate owing amounts liabilities balances, bank and and cash nature: assets short-term their to financial due following the of amounts carrying The Financial instrumentswhosecarryingamountsapproximate fairvalue contracts withsimilarmaturityprofiles. The fair value of forward currency contracts is determined by reference to current forward prices for Financial instrumentscarriedatfairvalue roup has used a sensitivity analysis technique that measures the estimated change to the profit the to change estimated the measures that technique analysis sensitivity a used has Group C ompany has no intention to dispose of their interests in the above investments in the the in investments above the in interests their of dispose to intention no has ompany arch 2008, for each class of financial instrument with all with instrument financial of class each for 2008, March notes to the 2008 4,484 D”) against all other all against (“SGD”) dollar Singapore The Group 31 March 2007 437 financial statements 2008 4,484 The Company 31 March 2007 437 – 31March2008 142

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

32. financial instruments (in thousands of $) (continued)

(d) Market risk sensitivity analysis (continued)

(i) Foreign currency risk

The following table demonstrates the sensitivity to a 1% strengthening or weakening of SGD exchange rate, with all other variables held constant, of the Group and Company’s profit before taxation and equity.

The Group The Company 31 March 31 March 2008 2007 2008 2007 Effect of strengthening of SGD Profit before taxation (184) (167) (195) (63) Equity 561 – 561 –

Effect of weakening of SGD Profit before taxation 184 167 195 63 Equity (561) – (561) –

(ii) Other price risks as at 31 March 2008, hypothetical changes in other risk variables would not significantly affect the price of financial instruments at that date.

33. capital Management

The primary objective of the management of the Company’s capital structure is to maintain an efficient capital base while retaining financial flexibility to pursue business opportunities and adequate access to liquidity to mitigate the effect of unforeseen events on cash flows.

The Directors regularly review the Company’s capital structure and make adjustments to reflect economic conditions, business strategies and future commitments.

During the financial year ended 31 March 2008, the Company made a total dividend payment to shareholders T 2007/08 of $128.5 million. REPOR

L Capital for the Group and Company (in thousands of $) is tabulated below: A U The Group The Company 31 March 31 March 2008 2007 2008 2007

Bank loans – 750 – – Less: Cash and cash equivalents 437,294 400,301 425,495 386,373 Net debt (437,294) (399,551) (425,495) (386,373)

Share capital 245,008 214,545 245,008 214,545 Reserves 880,310 782,625 666,597 578,353 sia engineering company ANN sia engineering company Total capital 1,125,318 997,170 911,605 792,898

143 Capital and net debt 688,024 597,619 486,110 406,525 Sales ofservicesandrelated materialsto: Income (in thousandsof$) terms thatprevail inarm’s on lengthtransactionsduringthefinancialyear: business of course normal the in out carried were which transactions party related significant following the were these statements, financial the in elsewhere disclosed information party related the to addition In or commonsignificantinfluence.Relatedpartiesmaybeindividualsotherentities. orthe where orversa, vice decisions, andoperating financial has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making the to related be to considered are parties statements, financial these of purposes the For related P 34.

Purchases ofgoodsfrom: P R Management feescharged bytheimmediateholding Expense R I E

Services rendered by:

nterest income from the immediate holding company company holding immediate the from income nterest quipment fee charged to the immediate immediate the to charged fee quipment urchases of materials from the immediate immediate the from materials of urchases ental of workshop and office space charged by the the by charged space office and workshop of ental ental of office space charged to the immediate immediate the to charged space office of ental - - - holding company immediate holdingcompany - technical andinsuranceservicesequipmentleases company forcorporate,generalandadministrative, holding company holding company - - -

the immediate holding and related companies companies related and holding immediate the associated companies joint venture companies associated companies joint venture companies the immediateholdingcompany a related company arty Transactions G notes to the roup and the party are subject to common control control to common are roup subject and the party 2007-08 719,873 189,259 23,388 10,598 10,387 3,171 1,281 4,115 8,528 7,359 9,342 2,628 The Group 1 2006-07 689,957 199,499 22,805 11,659 11,718 4,901 1,397 4,828 9,142 5,005 9,389 2,936 13 financial statements 2007-08 696,793 189,259 23,388 10,598 10,387 3,171 1,281 4,115 8,528 7,359 9,342 2,628 The Company roup if the if Group 1 2006-07 668,550 199,499 22,805 11,659 11,718 4,901 1,397 4,828 9,142 5,005 9,389 2,936 Group 13 – 31March2008 144

sia engineering company ANNUAL REPORT 2007/08 notes to the financial statements – 31 March 2008

34. related Party Transactions (continued)

Directors’ and key executives’ remuneration of the Company ($)

The Company 2007-08 2006-07

Directors Directors’ fees 769,477* 741,068

Key executives (excluding executive directors) Salary, bonuses and other costs 2,357,000 2,994,000 CPF and other defined contributions 49,000 49,000 Share based compensation expense 654,000 530,000

* proposed

Share options granted to and exercised by key executives of the Company are as follows:

Aggregate Aggregate options options granted since exercised since Aggregate Exercise price commencement commencement options Options for options of scheme to of scheme to outstanding granted during granted during end of financial end of financial at end of financial year financial year year under year under Options financial year Name of participant under review under review review review lapsed under review

William Tan 68,400 $4.67 1,511,200 430,000 – 1,081,200 Chan Seng Yong 28,700 $4.67 776,925 633,225 – 143,700 Png Kim Chiang 28,700 $4.67 738,900 502,200 – 236,700 Jack Koh Swee Lim 28,700 $4.67 71,700 –– 71,700 Ivan Neo Seok Kok 42,800 $4.67 454,900 224,975 – 229,925

T 2007/08 Zarina Piperdi 28,700 $4.67 106,700 –– 106,700 REPOR L A U sia engineering company ANN sia engineering company

145 35 percent stake. the in heavy maintenance facility at n 4 On 35. * Conditional awards grantedtokeyexecutivesoftheCompanypursuantRSPandPSPare asfollows: related P 34. Zarina Piperdi Jack KohSweeLim Png KimChiang Chan SengY William Tan PSP Ivan NeoSeokKok Zarina Piperdi Jack KohSweeLim Png KimChiang Chan SengY William Tan RSP xceed 5%ofthetotalnumberRSPor/andPSPshare awards grantedrespectively E N ame ofparticipant SubsequentEvent pril 2008, the 2008, April hilippines. The Philippines. ong ong arty Transactions ompany signed a joint venture agreement with agreement venture joint a signed Company ompany will hold a 65 percent stake, while stake, percent 65 a hold will Company Clark nternational International granted during financial year under review S (continued) hares hares 28036,500* 22,800 07017,200 10,700 07019,100 10,700 07017,200 10,700 07017,200 10,700 07017,200 10,700 71040,200* 17,100 9,600 ,0 15,400* 9,600 ,0 15,400* 9,600 ,0 15,400* 9,600 Airport in the commencement end of financial financial of end granted since since granted of schemeto year under A ggregate ggregate shares shares review notes to the Philippines. The joint venture will be incorporated 9,600* Cebu commencement end of financial financial of end released since of schemeto Cebu year under A ggregate ggregate shares shares review Pacific Pacific ir will hold the remaining the hold will Air – – – – – – – – – – – – – – – – – – – – – – financial statements ir to set up an aircraft an up set to Air S lapsed hares hares financial year under review outstanding A at end of of end at ggregate ggregate shares shares 15,400 15,400 15,400 36,500 17,200 19,100 17,200 17,200 17,200 40,200 9,600 – 31March2008

146

sia engineering company ANNUAL REPORT 2007/08 additional information Required by the Singapore Exchange Securities Trading Limited

1. interested Person Transactions (in thousands of $)

The aggregate value of interested person transactions (“IPTs”) entered into during the financial year are as follows:

Aggregate value of all IPTs during the financial year under review (excluding Aggregate value of all transactions less than IPTs conducted under the $100,000 and transactions shareholders’ mandate conducted under the pursuant to Rule 920 shareholders’ mandate (excluding transactions Name of interested person pursuant to Rule 920) less than $100,000)

Singapore Airlines Ltd – 6,154 Singapore Airport Terminal Services Ltd – 180 SilkAir Pte Ltd – 5,000 (100% owned by Singapore Airlines Ltd) Tiger Airways Pte Ltd – 89,385 (49% owned by Singapore Airlines Ltd, 11% by Dahlia Investments Pte Ltd which is a wholly-owned subsidiary of Temasek Holdings Pte Ltd) Senoko Energy Supply Pte Ltd – 2,400 (100% owned by Senoko Power Limited and ultimately by Temasek Holdings Pte Ltd) ST Kinetics Ltd – 5,640 (100% owned by Singapore Technologies Engineering Ltd which is 54.3% owned by Temasek Holdings Pte Ltd) ST Aerospace Supplies Pte Ltd – 1,020 (100% owned by ST Aerospace Ltd which is 100% owned by Singapore Technologies Engineering Ltd) ASprecise Pte Ltd – 1,128 T 2007/08 (66% owned by Temasek eVentures and ultimately by Temasek Holdings Pte Ltd) REPOR

L Great Wall Airlines Limited – 600 A U (25% owned by SIA Cargo Pte Ltd and 24% owned by Dahlia Investments Pte Ltd which is a wholly- owned subsidiary of Temasek Holdings Pte Ltd) Keppel Electric Pte Ltd – 1,311 (100% owned by Keppel Energy Pte Ltd, which is a wholly-owned subsidiary of Keppel Corporation Ltd (KCL) and 31% of KCL is owned by Temasek Holdings Pte Ltd)

sia engineering company ANN sia engineering company Total – 112,818 147 material contractsstillsubsistattheendoffinancialyear. the of interests involving contracts year,previousfinancial the of the end the Since material Contracts 2. Chief Executive ompany and its subsidiaries did not enter into any materialany into enter not did subsidiaries its and Company Required by the Singapore Exchange Securities Trading Limited fficer, directors or controlling shareholders and no such Officer, no and shareholders controlling or directors additional information 148

sia engineering company ANNUAL REPORT 2007/08 quarterly results of the group

First Second Third Fourth Quarter Quarter Quarter Quarter Total Revenue: 2007-08 ($ million) 270.1 265.8 248.6 225.1 1,009.6 (%) 26.8 26.3 24.6 22.3 100.0

2006-07 ($ million) 248.6 244.3 245.8 238.7 977.4 (%) 25.4 25.0 25.2 24.4 100.0

Expenditure: 2007-08 ($ million) 240.9 231.7 229.5 204.6 906.7 (%) 26.6 25.5 25.3 22.6 100.0

2006-07 ($ million) 215.5 209.6 219.3 231.0 875.4 (%) 24.6 23.9 25.1 26.4 100.0

Operating profit: 2007-08 ($ million) 29.2 34.1 19.1 20.5 102.9 (%) 28.4 33.1 18.6 19.9 100.0

2006-07 ($ million) 33.1 34.7 26.5 7.7 102.0 (%) 32.5 34.0 26.0 7.5 100.0

Profit before taxation: 2007-08 ($ million) 77.7 82.8 61.2 63.8 285.5 (%) 27.2 29.0 21.4 22.4 100.0

2006-07 ($ million) 74.5 80.4 63.5 52.6 271.0 (%) 27.5 29.7 23.4 19.4 100.0 T 2007/08 Profit attributable to equity holders of the Company:

REPOR 2007-08 ($ million) 70.5 74.5 53.6 55.2 253.8 L

A (%) 27.8 29.4 21.1 21.7 100.0 U

2006-07 ($ million) 66.4 72.0 55.3 48.4 242.1 (%) 27.4 29.8 22.8 20.0 100.0

Earnings (after tax) per share – basic: 2007-08 (cents) 6.6 7.0 5.0 5.1 23.7 (%) 27.9 29.5 21.1 21.5 100.0

2006-07 (cents) 6.4 6.8 5.2 4.6 23.0 sia engineering company ANN sia engineering company (%) 27.8 29.6 22.6 20.0 100.0 149 Intangibles Fixed assets Deferred taxation Minority interests Equity attributabletoequityholdersoftheCompany s

s generalreserve Reserves Net liquidassets Share Capital Balance sheet($million) Total liabilities Profit attributabletoequityholdersoftheCompany Current liabilities Profit before taxation Long-term liability Exceptional item Total assets Share ofprofits ofassociated/ Current assets Other income Long-term investments nternally generatedcashflow Internally Operating profit Joint venture companies Capital expenditure Cash flowfrom operations Cash flowstatement($million) Expenditure Associated companies Revenue Profit andlossaccount($million)

Fair value reserve reserve value Fair Foreign currency translation reserve reserve translation currency Foreign joint venture companies companies venture joint hare premium premium hare hare-based compensation reserve reserve compensation hare-based R1

R2 R3 five yearfinancialsummaryofthegroup 2007-08 1,125.3 1,413.5 1,009.6 275.7 937.5 245.0 251.6 253.8 251.5 285.5 157.8 673.6 102.9 129.9 906.7 343.6 220.0 437.2 (88.4) 21.8 14.8 28.5 24.8 14.6 94.4 58.5 11.6 2.7 0.1 – – 060 050 040 2003-04 2004-05 2005-06 2006-07 ,1. 1376 ,0. 1,120.2 1,100.4 1,327.6 1,315.0 5. 201 2. 207.4 221.5 230.1 250.3 9. 1088 5. 925.8 858.5 1,038.8 997.1 1. 855 4. 828.4 741.0 885.5 811.7 1. 131 0. 100.5 101.8 163.1 214.5 9. 299 2. 180.7 225.2 259.9 291.5 4. 206 7. 139.0 170.4 230.6 242.1 9. 279 2. 180.7 225.2 257.9 291.5 7. 233 9. 128.0 194.3 263.3 271.0 3. 156 55 48.8 75.5 105.6 139.5 0. 641 0. 596.5 506.3 694.1 609.4 0. 147 0. 78.0 100.8 134.7 102.0 5. 155 0. 118.6 105.9 185.5 155.0 7. 844 0. 600.7 706.7 824.4 875.4 3. 298 7. 246.4 277.2 299.8 339.6 0. 205 3. 146.8 136.0 250.5 473.7 200.9 325.2 497.6 397.6 7. 991 0. 678.7 807.5 959.1 977.4 4.) 2.) 1.) (10.4) (15.5) (21.7) (47.1) 32 48 44 11.6 14.4 14.8 13.2 32 41 . 2.1 2.3 14.1 13.2 80 19 . 0.9 5.6 11.9 18.0 95 30 . 4.3 9.0 23.0 29.5 46 46 46 17.3 14.6 14.6 14.6 58 98 60 52.6 56.0 69.8 85.8 71 82 69 35.5 56.9 38.2 47.1 53 92 48 – 24.8 19.2 15.3 – – . – 2.0 – – 56 6.4 25.6 – – . (3.1) 9.0 – – – – 150

sia engineering company ANNUAL REPORT 2007/08 five year financial summary of the Group(continued)

2007-08 2006-07 2005-06 2004-05 2003-04

Profitability ratios (%) Return on shareholders’ funds R4 23.9 23.8 24.3 19.1 15.8 Return on total assets 18.0 18.4 17.4 15.5 12.4 Return on turnover 25.1 24.8 24.0 21.1 20.5

Productivity and employee data Value added ($ million) 755.5 717.0 670.8 577.0 453.6 Value added per employee ($) 123,528 126,651 130,690 123,751 97,508 Revenue per employee ($) 165,071 172,651 186,857 173,173 145,889 Average number of employees 6,116 5,661 5,133 4,663 4,652

Per share data (cents) Earnings before tax 26.7 25.7 25.6 19.2 12.8 Earnings after tax – basic R5 23.7 23.0 22.5 16.9 13.9 – diluted R6 23.3 22.5 22.1 16.7 13.8 Net asset value R7 104.7 93.9 100.2 84.4 92.1

Gross dividends (cents per share) Interim dividend 4.0 4.0 4.0 3.0 2.0 Final dividend – ordinary 16.0 # 8.0 6.0 4.5 2.5 – special - - 20.0 - 20.0 Total dividends 20.0 12.0 30.0 7.5 24.5

# proposed

Notes: R1 in accordance with the revised FRS 38: Intangible Assets, the Group has reclassified the net book value of computer software from fixed assets to intangible assets for 2004-05. The comparative for 2003-04 has not been restated. R2 net liquid assets is derived by offsetting current loans against liquid assets.

T 2007/08 R3 internally generated cash flow comprises cash generated from operations, dividends from associated and joint venture companies, and proceeds from sale of fixed assets. R4 return on shareholders’ funds is profit attributable to equity holders of theC ompany expressed as a percentage of the average equity attributable REPOR

L to equity holders of the Company. A

U R5 earnings after tax per share (basic) is computed by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue. R6 earnings after tax per share (diluted) is computed by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue after adjusting for the dilutive effect on the exercise of all outstanding share options granted to employees. R7 net asset value per share is computed by dividing the equity attributable to equity holders of the Company by the number of ordinary shares in issue at 31 March. sia engineering company ANN sia engineering company

151 51% aerospace 51% singapore Jamco 65% siaec GlobalPteLtd 100% aircraftMaintenance 100% a Companies S Corporation (Philippines) Pte Limited Engineering Services Component Pte Ltd Pty Ltd Services Australia ubsidiary viation viation P artnership artnership SIA EngineeringCompanyLimited singapore Aero 50% 50% i Joint Venture Companies Pte Ltd Engine Services Overhaul PteLtd Engine Component nternational nternational G 49% 24.5% a sian Compressor 24.5% Aerospace international 33.3% 39.2% 40% 40% 45% 47.1% pTJasAero-Engineering 49% pW 49% 49% 49% roup CorporateStructure c g m e a p Technology ServicesCoLtd Tubes-Asia PteLtd Service Center-Asia PteLtd Private Limited Engineering PteLtd JAMCO Aero Design& Services Private Limited Technologies PteLtd Services PteLtd Pte Ltd Turbine Pte Ltd Services Ltd Fuel agle agle sian sian an Companies ombustor ombustor oodrich oodrich A essier essier nternational Limited A International ssociated A A sia sia S S ccessory ccessory urface Technologies Technologies urface ervices ervices C S P oating oating A ervices acific acific erostructures erostructures A irmotive irmotive A S S A sia sia ervice ervice A ervices ervices viation viation sia sia As at31March2008 152

sia engineering company ANNUAL REPORT 2007/08 shareholding statistics As at 15 May 2008

Number of shares in issue : 1,074,637,937 Class of shares : ordinary shares Voting rights : 1 vote for 1 share

Range of Shareholdings Number of Shareholders % Amount of Shareholdings % 1 --- 999 200 1.92 93,342 0.01 1,000 --- 10,000 9,236 88.76 19,464,858 1.81 10,001 --- 1,000,000 961 9.23 29,980,611 2.79 1,000,001 and above 9 0.09 1,025,099,126 95.39 Total 10,406 100.00 1,074,637,937 100.00

Major Shareholders

Name Number of shares held % Singapore Airlines Limited 870,000,000 80.96 DBS Nominees Pte Ltd 64,173,317 5.97 HSBC (Singapore) Nominees Pte Ltd 26,744,950 2.49 Raffles Nominees Pte Ltd 24,064,427 2.24 DBSN Services Pte Ltd 16,913,784 1.57 Citibank Nominees Singapore Pte Ltd 14,421,948 1.34 Morgan Stanley Asia (Singapore) Securities Pte Ltd 4,177,700 0.39 United Overseas Bank Nominees Pte Ltd 3,003,000 0.28 TM Asia Life Singapore Ltd-par Fund 1,600,000 0.15 OCBC Nominees Singapore Pte Ltd 845,802 0.08 Merrill Lynch (Singapore) Pte Ltd 595,100 0.06 Wong Ket Seong @ Wong Ket Yin 570,000 0.05 DB Nominees (S) Pte Ltd 453,356 0.04 Png Kim Chiang 382,200 0.04 Phillip Securities Pte Ltd 315,503 0.03 Realty & Investment Holdings Pte Ltd 305,000 0.03 NTUC Thrift & Loan Co-operative Limited 300,000 0.03 T 2007/08 Chan Seng Yong 290,525 0.03 OCBC Securities Private Ltd 268,825 0.02 REPOR L

A CYL Investments Limited 264,000 0.02 U Total 1,029,689,437 95.82

Substantial Shareholders

Name Direct interest Indirect interest Total interest % Temasek Holdings (Pte) Ltd Nil 872,646,000 872,646,000 81.20% Singapore Airlines Ltd 870,000,000 Nil 870,000,000 80.96%

Shareholding held by the Public

sia engineering company ANN sia engineering company Based on the information available to the Company as of 15 May 2008, 18.79 per cent of the issued ordinary shares of the Company are held by the public and therefore, Rule 723 of the Listing Manual issued by the 153 SGX-ST is complied with. Price /CashEarnings** Price /BookValue Price /Earnings Market V 31 Lowest closingprice Highest closingprice Share Price(S$) ** C isdefinedasprofitash earnings attributable toequityholdersoftheCompanyplusdepreciation andamortisationofintangibles * Notes: (S$) Share price 1 2 5 3 0 4 Based onclosingprice31March M p 7My0 u 7Jl0 u 7Sp0 c 7Nv0 e 7Jn0 e 8Mar08 Feb08 Jan08 Dec07 Nov07 Oct07 Sep07 Aug07 Jul 07 Jun07 May07 Apr 07 arch closing price Vo Closing price ST Index alue Ratios* lume High Low share priceandturnover 2007-08 14.42 16.67 3.77 3.53 4.96 3.95 TidxVolume ST index 2000 2500 4000 3000 3500 500 0 1000 1500 2006-07 17.90 20.43 (million) 5.01 3.12 4.94 4.70 40 30 35 20 25 5 0 10 15 154

sia engineering company ANNUAL REPORT 2007/08 notice of annual general meeting

NOTICE IS HEREBY GIVEN that the 26th Annual General Meeting of SIA Engineering Company Limited (“the Company”) will be held at Olivia Room, Level 4, Raffles City Convention Centre, 2 Stamford Road, Singapore 178882 on Friday, 18 July 2008 at 10.00 a.m. to transact the following business:

ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Audited Financial Statements for the year ended 31 March 2008 and the Auditors’ Report thereon.

2. To declare a final tax exempt (one tier) dividend of 16 cents per ordinary share for the year ended 31 March 2008.

3. To re-elect the following Directors who are retiring by rotation pursuant to Article 83 of the Company’s Articles of Association and who, being eligible, offer themselves for re-election pursuant to Article 84 of the Company’s Articles of Association:

3.1 mr Chew Choon Seng 3.2 mr Koh Kheng Siong

4. To re-elect the following Directors who are retiring pursuant to Article 90 of the Company’s Articles of Association and who, being eligible, offer themselves for re-election as Directors:

4.1 mr Ron Foo Siang Guan 4.2 mr Lim Joo Boon 4.3 mr Oo Soon Hee

5. To appoint Mr Ng Chin Hwee as Director pursuant to Article 89 of the Company’s Articles of Association.

6. To approve the Directors’ Fees of $769,477 (FY2006/07: $741,068) for the year ended 31 March 2008.

7. To re-appoint Messrs Ernst & Young as Auditors of the Company to hold office until the next Annual General Meeting and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS

T 2007/08 8. To consider and, if thought fit, approve, with or without modification, the following resolutions as Ordinary Resolutions: REPOR L

A 8.1 That pursuant to Section 161 of the Companies Act, Cap 50, authority be and is hereby given to U the Directors of the Company to:

(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the

sia engineering company ANN sia engineering company Directors may in their absolute discretion deem fit; and

155

8.2 (b) (a) That theDirectors beand are hereby authorisedto: (4) (3)

(2) (1) provided that: (b)

of awards underthePerformanceShare Planand/ortheRestrictedShare Plan, and/or suchnumberoffully paidshares asmaybe required tobeissuedpursuantthevesting the under options of exercise the to pursuant issued be to required be may allot and issue from time to time such number of ordinary shares in the capital of the the of capital the in shares ordinary of number such time to time from issue and allot Restricted Share Plan,togetherthe“ Share Plans”);and a (“Restricted Plan SIAEC (“Share Plan offer and grant options in accordance with the provisions of the of provisions the with accordance in options grant and offer law tobeheld,whicheveristheearlier. C R (unless revoked or varied by the the by varied or revoked (unless Company; and has been waived by the the by waived been has this by Listing of the provisions conferred authority the exercising in (ii) resolutionispassed;and

(i) of capital the in shares) treasury (excluding shares shares the CompanyattimethisResolutionispassed,afteradjustingfor: issued issued of of number percentage the the on above, based (1) be shall sub-paragraph under issued be may number that aggregate shares the of determining of purpose the for (“SGX-ST”)) Limited Trading Securities (subject to such manner of calculation as may be prescribed by the the by prescribed be may as calculation of manner such to (subject in shares) treasury (excluding shares issued the capitalofCompany(ascalculatedinaccordance withsub-paragraph(2)below); the of cent. per 10 exceed not does Resolution) (including shares to be issued in pursuance of of the pursuance the of in of issued shareholders to capital be basis to the rata shares pro a in on (including than shares) other issued be treasury to shares of (excluding number shares issued the of C cent. per 50 exceed of pursuance in issued the aggregate number of shares to be issued pursuant to this this to pursuant issued be to shares of number aggregate the any of Resolution wasinforce, pursuance in shares issue ntihtnig h atoiy ofre b this by conferred authority the (notwithstanding esolution shall continue in force until the conclusion of the next next the of conclusion the until force in continue shall esolution ompany or the date by which the next next the which by date the or ompany ompany (as calculated in accordance with sub-paragraph (2) below), of which the aggregate aggregate the which of below), (2) sub-paragraph with accordance in calculated (as ompany any subsequentbonusissueorconsolidationsubdivisionofshares; options or vesting of share awards which are outstanding or subsisting at the time this this time the at subsisting or outstanding are which awards share of vesting or options e sae aiig rm h cneso o eecs o ay ovril scrte o share or securities convertible any of exercise or conversion the from arising shares new Performance Option Share Share ”) and/or to grant awards in accordance with the provisions of the the of provisions the with accordance in awards grant to and/or Plan”) M srmns ae r rne prun t this to pursuant granted or made Instruments ”), (the (the Plan”), anual of the of the anual SG lan (“Performance Plan X- S T) and the the and T) C ompany in general meeting) the authority conferred by this this by conferred authority the meeting) general in ompany I nstrument made or granted by the Directors while this this while Directors the by granted or made nstrument SG S hare hare A X- nnual nnual S T for the time being in force (unless such compliance compliance such (unless in force being T time the for O A notice of ption ption R rticles of of rticles Share esolution, the the esolution, G I nstruments made or granted pursuant to this this to pursuant granted or made nstruments eneral eneral slto my ae esd o e n force) in be to ceased have may Resolution P lan, the the lan, ”) and/or the the and/or Plan”) M A ssociation for the time being of the the of being time the for ssociation eeting of the the of eeting R P C esolution (including shares to be be to shares (including esolution erformance erformance annual general meeting ompany shall comply with the the with comply shall ompany SIAEC A nnual nnual C SIAEC Employee G ompany is required by by required is ompany slto) os not does Resolution) eneral eneral S S ingapore ingapore hare hare Share

R estricted estricted M Share P eeting of the the of eeting C Option lan and the the and lan ompany as as ompany E C xchange xchange ompany ompany Option S Plan hare hare

156

sia engineering company ANNUAL REPORT 2007/08 notice of annual general meeting

provided always that the aggregate number of ordinary shares to be issued pursuant to the Share Plans shall not exceed 15 per cent. of the total number of issued ordinary shares (excluding treasury shares) in the capital of the Company from time to time.

8.3 That:

(a) approval be and is hereby given, for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”) of the Singapore Exchange Securities Trading Limited, for the Company, its subsidiaries and associated companies that are “entities at risk” (as that term is used in Chapter 9), or any of them to enter into any of the transactions falling within the types of interested person transactions described in the Appendix to the Letter to Shareholders dated 13 June 2008 (the “Letter”) with any party who is of the class of interested persons described in the Appendix, provided that such transactions are made on normal commercial terms and in accordance with the review procedures for such interested person transactions;

(b) the approval given in paragraph (a) above (the “IPT Mandate”) shall, unless revoked or varied by the Company in General Meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(c) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required), as they and/or he may consider expedient or necessary or in the interests of the Company to give effect to the transactions contemplated and/or authorised by the IPT Mandate and/or this Resolution.

9. To transact any other business of the Company which may arise and can be transacted at an Annual General Meeting.

CLOSURE OF BOOKS

NOTICE IS HEREBY GIVEN that, subject to the approval of shareholders to the final dividend being obtained at the 26th Annual General Meeting to be held on 18 July 2008, the Share Transfer Books and Register of Members of the Company will be closed on 25 July 2008 for preparation of dividend warrants.

Duly completed and stamped transfers (together with all relevant documents of or evidencing title) received by the Company’s Share Registrar, M & C Services Private Limited, at 138 Robinson Road #17-00, The Corporate T 2007/08 Office, Singapore 068906, up to 5.00 p.m. on 24 July 2008 will be registered to determine shareholders’ entitlement to the final dividend. Subject as aforesaid, shareholders whose Securities Accounts with The REPOR L

A Central Depository (Pte) Limited are credited with ordinary shares in the capital of the Company as at 5.00 p.m. U on 24 July 2008 will be entitled to the final dividend.

The final dividend, if so approved by shareholders, will be paid on 5 August 2008.

By Order of the Board

DEVIKA RANI DAVAR Company Secretary 13 June 2008 sia engineering company ANN sia engineering company Singapore 157 n relation to relation in 1. Explanatory Notes: 2. 3. 4. 5. rlto to relation in i o o from office at the C continue to serve the as a member of at the re-election for standing be will and overnance intheF Y2007/08 AnnualReportforinformationonMrChewandKoh. and CorporateGovernance while the of member a shall then be eligible for re-election. for eligible be then shall Directors. Directors to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing of the of 26th forthcoming the whom were appointed on 1 & HR & Nominating FY2007/08 AnnualReportforinformationonMrFoo,LimandOo. on “Proposed NewDirector” intheFY2007/08Annual Report forinformationrelating toMrNg. of Articles the at Directors existing the to addition an Option convertible into shares and to issue shares pursuant to such such to next the of date the pursuant until meeting shares issue to and shares into convertible and to allot and issue ordinary shares in the capital of the in capital the shares ordinary issue and to and allot f hrs Fr h aodne f ob, hrhles apoa wl b rqie fr n cnoiain or consolidation any for requiredsub-division ofshares. be will approval shareholders’ doubt, of avoidance the For shares. of 7 July 2001 and was further modified at the at modified further was and 2001 July 7 Employee M 10 per cent. sub-limit for non-pro rata issues is lower than the 20 the per of cent. capital sub-limit allowed the under the Listing this under issue this time the at outstanding are which awards share of vesting or options share or instruments convertible any the of capital the Ordinary in shares) treasury (excluding shares issued of number total the on based be shall shares issued of percentage the issued, be may which shares of number aggregate 12 July 2003 and 26 July 2004 respectively.2004 July 26 and 2003 July 12 The Share Planwere adoptedattheExtraordinaryG eneralMeetingoftheCompanyheldon25July2005. n relation to n relation ommittee. ommittee. rdinary rdinary rdinary rdinary anual of the the of anual Ordinary Committee. M Audit Plan, the r Koh is considered an independent Director. Director. independent an considered is Koh r R esolution is passed, after adjusting for (a) new sharesexercisenew fromor (a) arisingconversionoffor the adjusting after passed, is Resolution R Any Director so appointed shall hold office only until the next following annual general meeting, and Share esolution esolution esolution esolution Association. Committee. Committee. M O Ordinary Ordinary esolution is passed and (b) any subsequent bonus issue or consolidation or subdivision or consolidation or issue bonus subsequent any (b) and passed is Resolution SG r Koh will, upon re-election, continue to serve as as serve to continue re-election, upon will, Koh r rdinary rdinary esolution will not exceed 50 per cent. of the issued sharestreasuryissued (excluding the shares) of incent. per 50 exceed not will Resolution SIAEC Option X- Annual C ompensation & HR & Compensation Mr ompany with a sub-limit of 10 per cent. for issues other than on a pro rata basis. The The basis. rata pro a on than other issues for cent. per 10 of sub-limit a with ompany S N N T and the the and T Annual o will, upon re-election, continue to serve as a member of the of member a as serve to continue re-election, upon will, Oo R o. 8.2 if passed, will empower the Directors to offer and grant options and/or awards awards and/or options grant and offer to Directors the empower will passed, if 8.2 o. o. 8.1, if passed, will empower Directors to issue shares, make or grant grant or make shares, issue to Directors empower will passed, if 8.1, o. Resolution Resolution esolution esolution Performance Mr lease refer to the sections on Board of Directorsand Boardof on sections the referto Please r Lim will, upon re-election, continue to serve as a member of the of member a as serve to continue re-election, upon will, Lim Mr lan was adopted at the at adopted was Plan General August 2007, are considered independent Directors and are seeking re-election at g is considered to be a non-independent Director.non-independent a be to considered is Ng General A rticles of of rticles N Meeting pursuant to A . 4, No. o. 3, No. o. 5, approval will be sought for the appointment of appointment the for be sought will o. 5, approval nnual nnual Mr Meeting. Share Nominating on Foo Ron Committee. G Mr tce 0 f the of 90 Article A A eneral eneral ssociation of the the of ssociation Plan and the nnual nnual Chew Annual r Foo will, upon re-election, continue to serve as a member a as serve to continue re-election, upon will, Foo Mr Extraordinary Siang SIAEC G M Extraordinary Committee, eneral eneral Choon eeting. The number of shares which the Directors may may Directors the which shares of number The eeting. Mr General Guan, notice of P Article 83 of the Performance hew is considered a non-independent Director,non-independent a considered is Chew lease refer to the sections on Board of Directors Directors of Board on sections the to refer lease SIAEC C M ompany pursuant to the pursuant ompany eng and Seng Company’s eeting pursuant to to pursuant eeting C r Lim Joo Boon and Boon Joo Lim Mr General ompany. For the purpose of determining the the determining of purpose the For ompany. Compensation & HR Meeting. Restricted General I C nstruments, from the date of the above above the of date the from nstruments, hairman of the the of hairman Share r Koh Kheng Koh Mr eig o the of Meetings tce of Articles Company’s Mr eeting of the of Meeting annual general meeting Share lan and the SIAEC and Plan e wl, pn re-election, upon will, Chew Corporate A lease refer to the section the to refer Please rticle 89 of the the of 89 rticle C Plan. The modified A ompany at the time this this time the at ompany scain emt the permits Association SIAEC udit udit Mr Articles of Committee and Board Audit iong will be retiringbe will Siong M Oo C r r may ed on held Company overnance in the in Governance ompany held on held Company N ommittee and as as and ommittee

E oon Hee, all of all Hee, Soon g g ommittee and Committee mployee mployee Compensation C hin Hwee as Hwee hin Association I C nstruments nstruments Restricted ompany’s SIAEC S hare hare

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sia engineering company ANNUAL REPORT 2007/08 notice of annual general meeting

6. ordinary Resolution No. 8.3, if passed, will allow the Company, its subsidiaries and relevant associated companies or any of them to enter into certain interested person transactions with certain classes of interested persons as described in the Appendix to the Letter.

Notes:

1. a member of the Company entitled to attend and vote at the Annual General Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. A proxy need not be a member of the Company.

2. The instrument appointing a proxy must be deposited at the Company’s Share Registrar, M & C Services Private Limited, 138 Robinson Road #17-00, The Corporate Office, Singapore 068906 not less than 48 hours before the time fixed for holding the Annual General Meeting. T 2007/08 REPOR L A U sia engineering company ANN sia engineering company

159 SIA ENGINEERING COMPANY LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 198201025C proxy form – annual general meeting

1. For investors *I/We (NRIC/Passport No. ) who have used their CPF of monies to buy the Company’s being a *member/members of SIA Engineering Company Limited (the “Company”), hereby appoint shares, this report is forwarded to Proportion of them at the NRIC/ Shareholdings request of their CPF approved Name Address Passport No (No. of Shares) nominees and is sent solely FOR THEIR INFORMATION and/or (delete as appropriate) ONLY.

2. This Proxy Form is not or failing *him/her, the Chairman of the Annual General Meeting (“AGM”) of the Company as *my/our *proxy/proxies to attend and to vote for valid for use by CPF investors *me/us and on *my/our behalf and, if necessary, to demand a poll, at the AGM of the Company to be held at Olivia Room, Level 4, RafflesC ity and shall be Convention Centre, 2 Stamford Road, Singapore 178882 on Friday, 18 July 2008 at 10.00 a.m. and at any adjournment thereof. ineffective for all intents and purposes if used *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specific or purported direction as to voting is given, the *proxy/proxies will vote or abstain from voting at *his/their discretion, as *he/they will on any other matter to be used by them. arising at the AGM and at any adjournment thereof. If no person is named in the above boxes, the Chairman of the AGM shall be *my/our *proxy/proxies to vote, for or against the Resolutions to be proposed at the AGM as indicated hereunder, for *me/us and on *my/our behalf and, 3. cpF investors if necessary, to demand a poll, at the AGM and at any adjournment thereof. who wish to attend the 26th Annual General Meeting as No. **For **Against OBSERVERS have to submit Ordinary Business their requests through their 1. Adoption of the Directors’ Report, Audited Financial Statements and the Auditors’ Report respective Agent Banks so that 2. Declaration of ordinary dividend their Agent Banks may 3. Re-election of Directors retiring by rotation pursuant to Article 83 of the Articles of Association register with of the Company: the Company’s Registrar. 3.1 Mr Chew Choon Seng (Please see Note No. 8 on the 3.2 Mr Koh Kheng Siong next page). 4. Re-election of Directors retiring pursuant to Article 90 of the Articles of Association of the Company: 4.1 Mr Ron Foo Siang Guan 4.2 Mr Lim Joo Boon 4.3 Mr Oo Soon Hee 5. Appointment of Mr Ng Chin Hwee as Director 6. Approval of Directors’ Fees for the year ended 31 March 2008 7. Re-appointment and remuneration of Auditors Special Business 8.1 Authority for Directors to issue shares or make or grant offers, agreements or options requiring shares to be issued 8.2 Authority for Directors to offer and grant options and/or grant awards, and to allot and issue shares in accordance with the provisions of the Employee Share Option Plan, the Performance Share Plan and the Restricted Share Plan 8.3 To approve the proposed renewal of the IPT Mandate 9. Any other business

* Delete accordingly ** Please indicate your vote “For” or “Against” with a “3” within the box provided

Dated this day of 2008 Total number of Ordinary Shares held:-

Notes:- IMPORTANT Signature(s) of Shareholder(s) or Common Seal Please read Notes on the reverse. Third fold along this line

NOTES:- 1. a member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his stead. Such proxy need not be a member of the Company. 2. Where a member appoints two proxies, he must specify the proportion of his shareholding to be represented by each proxy, failing which the appointments will be deemed to have been made in the alternative. 3. The instrument appointing a proxy must be signed by the appointor or his duly authorised attorney or if the appointor is a corporation, it must be executed either under its common seal or signed by its attorney or officer duly authorised. 4. a corporation which is a member may also appoint by resolution of its directors or other governing body an authorised representative or representatives in accordance with its Articles of Association and Section 179 of the Companies Act (Cap. 50), to attend and vote on its behalf. 5. The instrument appointing a proxy or proxies (together with the power of attorney, if any, under which it is signed or a certified copy thereof) must be deposited at the Company’s Share Registrar, M & C Services Private Limited, 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, at least 48 hours before the time appointed for the AGM. 6. a member should insert the total number of ordinary shares held. If the member has ordinary shares entered against his name in the Depository Register (as defined in Section 130A of the Companies Act (Cap. 50), he should insert that number of ordinary shares. If the member has ordinary shares registered in his name in the Register of Members, he should insert that number of ordinary shares. If the member has ordinary shares entered against his name in the Depository Register as well as ordinary shares registered in his name in the Register of Members, he should insert the aggregate number of ordinary shares. If no number is inserted, this form of proxy will be deemed to relate to all the ordinary shares held by the member. 7. The Company shall be entitled to reject this instrument of proxy if it is incomplete, or illegible, or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in this instrument of proxy.I n addition, in the case of a member whose ordinary shares are entered in the Depository Register, the Company shall be entitled to reject this instrument of proxy which has been lodged if such member is not shown to have ordinary shares entered against his name in the Depository Register at least 48 hours before the time appointed for holding the AGM as certified by The Central Depository (Pte) Limited to the Company. 8. agent Banks acting on the request of the CPF investors who wish to attend the meeting as observers are requested to submit in writing, a list with details of the investors’ names, NRIC/Passport numbers, addresses and number of ordinary shares held. The list, signed by an authorised signatory of the relevant Agent Bank, should reach the Company’s Registrar, M & C Services Private Limited at 138 Robinson Road #17-00, The Corporate Office,S ingapore 068906, at least 48 hours before the time appointed for holding the AGM.

Second fold along this line

Affix Postage Stamp The Company Secretary SIA Engineering Company c/o M & C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906

First fold along this line Green House Design + Communications www.siaec.com.sg

31 Airline Road Singapore 819831 Tel: (65) 6541-4768 Fax: (65) 6546-0679 Email: [email protected] Company Registration No. 198201025C

CONTACT PERSONS Devika Rani Davar Company Secretary/Vice President Corporate Email: [email protected] Tel: (65) 6541-5151

Chia Peck Yong Senior Manager Public Affairs Email: [email protected] Tel: (65) 6541-5134

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